Now Available: CORSIA Carbon Market Data from Ecosystem Marketplace
ICAO Environment CORSIA Newsletter

1 December 2021 | Today’s edition of the CORSIA newsletter marks the first publishing of data on carbon market transactions of CORSIA-eligible emissions units, following the August 2021 announcement on the ICAO-EM partnership (Ecosystem Marketplace (EM) is a non-profit initiative of Forest Trends). The information presented by EM here aims to enhance States’ and stakeholders’ understanding of the development of carbon markets, and to help States to better understand the effects of CORSIA on the international aviation sector.

EM has aggregated and anonymized reported carbon market transactions of CORSIA-eligible emissions units for 2020 and 2021 YTD. Information encompasses transactions as of 5 November 2021 from American Carbon Registry (ACR), Clean Development Mechanism (CDM), Climate Action Reserve (CAR), Gold Standard (GS), and Verra. In the table below, EM has provided annual summaries and totals for project categories derived from projects located in 17 countries in the geographic regions of Africa, Asia, Europe, Latin America and Caribbean, and North America.

When comparing the transaction periods of 2020 (1 January – 31 December) and 2021 YTD (1 January – 5 November), buyers have paid significantly different prices for CORSIA-eligible units ranging from less than USD 0.50/tCO2eq to more than USD 45.00/tCO2eq. The weighted average price for All Categories has dropped from USD 4.89/tCO2eq in 2020 to USD 3.08/tCO2eq in 2021 YTD. This drop is mostly attributed to an increased number of transactions of lower-priced Renewable Energy units in 2021 YTD. The weighted average price of CORSIA eligible Forestry and Land Use units has increased by about 26% between 2020 and 2021 YTD. This group of projects includes Improved Forest Management, Afforestation, and Reforestation. The shift in price was mostly driven by Improved Forest Management, the average price of which jumped by about 53%. More details can be found on the EM website.

As EM Respondents continue to report trade data to Ecosystem Marketplace, updated prices will be included in future editions of this newsletter.

View the data in EM’s Data Intelligence and Analytics Dashboard.

Article 6 and its Glasgow Rulebook: the Basics

16 November 2021 | Six years after negotiators adopted the Paris Climate Agreement, they finally completed the rulebook for implementing it at year-end climate talks in Glasgow (COP26) — an event that was supposed to happen three years ago, at the 2018 climate talks in Katowice, Poland (COP24).

The sticking point was Article 6, which became a lightning rod in Katowice and a dud in Madrid in 2019 before negotiators finally wrapped it up in Glasgow, with existential sticking points resolved and a few stubborn ones assigned to working groups for the coming year.

Article 6 is central to the agreement because it guides how countries cooperate to generate cheaper — and, thus, deeper — greenhouse gas reductions. In so doing, it should lead to more ambitious national climate action plans, which are called “Nationally Determined Contributions” (NDCs).

In 2019, the International Emissions Trading Association (IETA) looked at the NDCs then on the table and concluded that cross-border coordination in the form of carbon trading could cut the cost of meeting NDCs in half by 2030 – making it possible to cut emissions 50 percent deeper at no additional cost.

Internationally Transferred Mitigation Outcomes (ITMOs)

In the Paris Agreement, emission reductions that pass from one country’s greenhouse gas inventory to another country’s inventory are called Internationally Transferred Mitigation Outcomes (ITMOs).

Like all carbon credits, ITMOs are created by projects that either reduce emissions or remove gasses in one place, with the payments coming from another place.

They become ITMOs when those places are in different countries and the reduction is transferred from one country’s national greenhouse-gas inventory to another country’s greenhouse-gas inventory. This can happen at the government level, for example as when Switzerland purchased ITMOs from Peru. However, it’s more likely to happen at the corporate level when a company in one country purchases ITMOs from abroad to meet compliance criteria at home.

The Article 6 rulebook requires “corresponding adjustments” (CAs) when an ITMO is passed in this way.

A corresponding adjustment means that the “host” country, or the country where the carbon project is located, must first authorize the transfer and then adjust its own greenhouse gas inventory to reflect the fact that the emission reduction achieved inside its borders is being credited to another country. The buying country then adjusts its greenhouse gas inventory by the same amount.

Many developing countries, however, say they don’t want to transfer emission reductions abroad, and ITMOs aren’t the only international carbon assets.

Voluntary Emission Reductions

Voluntary Emission Reductions or Verified Emission Reductions (VERs) are emission reductions generated in the voluntary carbon market (VCM), and they don’t have to be entered into a national inventory because they aren’t created to meet a legal requirement. A host country can, if they choose, apply a corresponding adjustment to VERs that leave its border, but this is not required.

The VCM encompasses all transactions of carbon offsets that are not purchased with the intention to surrender into an active regulated carbon market. It does include offsets that are purchased with the intent to re-sell or retire to meet net zero, carbon neutral, or other climate claims.

In a cross-border voluntary transaction, a company in one country – say, Germany – can reduce its footprint by purchasing credits from a project in another country – say, Brazil – but the German company cannot use the credit to meet its legal requirements in Germany. Any reductions in greenhouse gas emissions are reflected in the activities on the ground in the host country, and that’s where they stay.

Some NGOs have advocated for imposing corresponding adjustments on voluntary carbon transactions, and there is a lively debate over what sorts of claims the buying company can make, but the Article 6 rulebook makes no reference to voluntary markets. For a deep dive, see “Corresponding Adjustments for Voluntary Markets – Seriously?

The Kyoto Legacy

To understand some of the confusion on Article 6, it helps to look back at the Kyoto Protocol and its Clean Development Mechanism (CDM), which was a centralized hub for executing cross-border compliance trades. Under the Kyoto Protocol, developing countries had no commitments, so no corresponding adjustments were necessary. In the lead-up to the signing of the Paris Agreement in 2015, many developing countries were surprised to learn they’d have to transfer their emission reductions abroad if selling ITMOs, and few have done so. This has led to an appetite for performance-based finance and voluntary transactions.

Also, the CDM included a transaction fee to finance its own operating costs and support the Adaptation Fund, which helps developing countries adapt to climate change. This fee is mentioned in Article 6.4 as of the Paris Agreement but not Article 6.2, which we’ll get to below.

Finally, the CDM generated an oversupply of credits, which several countries — primarily Brazil, China, India, and South Korea — wanted to see recognized in the CDM successor, while most countries were reluctant to let them in.

Paragraph 6.2 and its Rules

Paragraph 6.2 provides an accounting framework for bilateral and multilateral transfers, including programs that link the emissions-trading schemes of two or more countries. Here is the complete text of the paragraph:

Parties shall, where engaging on a voluntary basis in cooperative approaches that involve the use of internationally transferred mitigation outcomes towards nationally determined contributions, promote sustainable development and ensure environmental integrity and transparency, including in governance, and shall apply robust accounting to ensure, inter alia, the avoidance of double counting, consistent with guidance adopted by the Conference of the Parties serving as the meeting of the Parties to this Agreement.

Click here to view the 6.2 rulebook

The paragraph doesn’t create a trading system itself but instead provides a framework within which countries can create their own systems in ways that are consistent with UN rules and comparable to each other.

In the early days of the Glasgow talks, the most contentious issue focused on whether or not to implement a transaction fee to pay for adaptation in developing countries. Such a “share of proceeds” provision exists in Paragraph 6.4, as we mentioned above, but most developed countries pushed back on this provision, arguing that it was impossible to implement in a unified and fair way given the diversity of approaches being developed under 6.2.

The transaction fee didn’t appear in the final draft, but there is an invitation for the Adaptation Fund “to report in its annual reports to the CMA (the group of the countries who have signed and ratified the Paris Agreement) on funding related to participation in cooperative approaches.”

Negotiators also deemed several technical issues in need of further review, and these were assigned to the Subsidiary Body for Scientific and Technological Advice (SBSTA), which is a technical negotiating track that helps inform the next COP agenda. Among these are the treatment of corresponding adjustments after 2030, whether ITMOs can include reductions or be limited to removals, and how to handle corresponding adjustments for single-year NDCs. Ironically, single-year NDCs are more difficult than multi-year NDCs because the longer-term NDCs run on a carbon budget approach similar to the Kyoto Protocol.

The issue of reductions vs removals emerged in recent reports by the Intergovernmental Panel on Climate Change (IPCC), which has concluded that we must dramatically increase removals by 2050 to meet the climate challenge. Existing carbon credits tend to focus on activities that reduce emissions, activities that remove gasses were seen as a future activity. There is, however, an active debate among NGOs as to how to strike the balance between strategies that use ITMOs to support reductions and those that use them to support reductions.

Paragraph 6.4 and its Rules

Paragraph 6.4 establishes a centralized hub to replace the CDM, and the biggest points of contention coming into Glasgow were whether countries would have to correspondingly adjust their carbon accounts when transferring emission reductions into non-Paris accords, such as the CORSIA program for international passenger flights, and the degree to which Certified Emission Reductions (CERs) generated under the CDM could be applied towards NDCs. Here is a complete text of the paragraph:

A mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development is hereby established under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to this Agreement for use by Parties on a voluntary basis. It shall be supervised by a body designated by the Conference of the Parties serving as the meeting of the Parties to this Agreement, and shall aim:

  1. To promote the mitigation of greenhouse gas emissions while fostering sustainable development;
  2. To incentivize and facilitate participation in the mitigation of greenhouse gas emissions by public and private entities authorized by a Party;
  3. To contribute to the reduction of emission levels in the host Party, which will benefit from mitigation activities resulting in emission reductions that can also be used by another Party to fulfill its nationally determined contribution; and
  4. To deliver an overall mitigation in global emissions.

Click here to view the rulebook

The stickiest issue was resolved on the night of November 12, when Brazil agreed to require corresponding adjustments on all new emission reductions generated under Paragraph 6.4, breaking a logjam that had existed since 2015. For background, see “Will Double-Counting Dust-Up Crush Katowice Climate Conference?

In a compromise that’s been widely criticized, however, the rulebook sets out criteria for countries to use CERs from projects registered after January 1, 2013 to meet their first NDC or first adjusted NDC, with no corresponding adjustment since the CDM predates that requirement. It designates a 12-member Supervisory Body to oversee the emerging hub and tasks it with reviewing baselines of recognized credits.

The total number of pre-2020 CDM credits meeting the criteria is just over 100 million, and their date will be clearly labeled. Most participants are encouraging buyers to avoid using them in their NDCs, even if they can legally do so. For details, see “Glasgow Outcome: Ambitious Carbon Market Rules”.

The rules may be written, but they will certainly be subject to deeper interpretation than we can offer here. Get ready for another interesting year.

Further Sources

Decoding Article 6, Version 2”, a deep dive from the Asian Development Bank

Article 6 Handbook”, from Carbon Mechanisms

Or watch the video below from

What COP26 Means for Forests and the Climate

12 November 2021 | Dubbed the “Nature COP,” forests were front and center throughout the UN climate summit (COP26) this year. Among the first and most significant announcements made at COP26 was the Glasgow Leaders’ Declaration on Forests and Land Use, in which 137 countries committed to collectively end forest loss and land degradation by 2030.

Panellists speaking at the Forest event at the SEC at COP26 in Glasgow
Above: Panellists speaking at an event on forests at COP26 in Glasgow. Photo by Karwai Tang/ UK Government

This pledge was followed by scores of forest-related announcements — including significant funding commitments from countries and foundations to support conservation of tropical forests, the communities best positioned to steward them, and the restoration of degraded land. Meanwhile, companies and investors pledged to reduce forest loss and support a transition to more sustainable land-use within their supply chains and financial portfolios.

What does this mean for forests and climate action? We walk through the numbers.

What Was Promised on Forests at COP26?

Countries signing on to the Glasgow Declaration affirmed the importance of all forests in limiting global warming to 1.5 degrees C (2.7 degrees F), adapting to the impacts of climate change, and maintaining healthy ecosystem services. They agreed to collectively “halt and reverse forest loss and land degradation by 2030 while delivering sustainable development and promoting an inclusive rural transformation,” without saying exactly what they would do to achieve this goal.

Funding pledges followed the declaration. A total of $19.2 billion ($12 billion from public sources and $7.2 billion in private financing) was pledged to help protect and restore forests globally. This included $1.7 billion to help Indigenous peoples and local communities exercise decision-making and design roles in climate programs and finance instruments.

New ways of doing business were promised. A group of 28 countries pledged to protect forests while promoting development and trade through the Forest, Agriculture and Commodity Trade Roadmap. Twelve companies with a major global market share in commodities such as soy, palm oil, cocoa and cattle, also committed to halt forest loss associated with agricultural commodity production and trade.

And financial institutions rose to the occasion. More than 30 financial institutions managing over $8.7 trillion in assets committed to work on eliminating agricultural commodity-driven deforestation risks in their investment and lending portfolios by 2025.

How Could These Forest Commitments Help Achieve Global Climate Goals?

A rapid reduction in forest loss is critical to preventing irreversible biodiversity loss and securing the rights, livelihoods and cultural heritage of the Indigenous peoples and local communities who live in and around forests vulnerable to deforestation. Forests also play a massive role in the fight against climate change. But what are the climate benefits to be had if all signatories to the Glasgow Declaration were to make good on their commitments?

Here’s a breakdown:

Emissions Avoided by Ending Forest Loss

We compared such success to a business-as-usual scenario to estimate the potential greenhouse gas mitigation impact of the Glasgow Declaration. Ending forest loss by 2030 within all the signatory countries would offer 32.8 million hectares of avoided loss and 18.9 gigatonnes of carbon dioxide equivalent (GtCO2e) in avoided emissions. That’s an area roughly the size of Malaysia and equivalent to a quarter of global greenhouse gas emissions from transportation from 2009-2018.

Approximately 98% of the estimated avoided emissions are in the tropics, while the remaining 2% are in other climate domains. Nearly three quarters of these avoided emissions are in just three countries: Brazil, Indonesia, and the Democratic Republic of the Congo.



How we read the data

Our estimates are derived from historical tree cover loss data. We differentiate tree cover loss that is more likely to be permanent (which we count as forest loss) from tree cover loss that is more likely to be temporary, and not associated with land-use change (which we do not count as forest loss).

To estimate global forest loss, we approximate the proportion of global tree cover loss that is likely to be permanent (i.e., where tree cover loss is associated with conversion of forests to new, non-forest land uses). This proxy uses data on the drivers of tree cover loss to estimate all tree cover loss driven by commodity production and urbanization, as well as tropical primary tree cover loss driven by expansion of small or medium-scale agriculture.

Tree cover includes woody vegetation with a height of at least 5 meters and a canopy density of at least 30% at a 30-meter Landsat pixel scale. Although wildfires and forestry are also major causes of tree cover loss and associated emissions, they are typically more temporary in nature and not associated with permanent land-use change. They are not considered as “forest loss” for the purposes of this estimate. Learn more about how we designate tree cover loss classes on the Global Forest Review.

To estimate the business-as-usual scenario, we extrapolated the 2015-2020 annual average forest loss and associated emissions for each signatory country up to 2030 and aggregated across all signatory countries. To calculate avoided forest loss and associated avoided emissions, we compared this business-as-usual scenario to a linear reduction in forest loss from 2022-2030.

This analysis does not consider overlaps with other Glasgow commitments, including Nationally Determined Contributions (NDCs) and net-zero pledges, and therefore does not make claims regarding the extent to which the avoided emissions from the Glasgow Declaration are additional to those commitments.


Climate Mitigation from Protecting Standing Forests

Ending the emissions released into the atmosphere from deforestation would be a huge climate win, but forests have even more climate potential to offer. As forests grow, they sequester more carbon from the atmosphere: Data shows that between 2001-2020, forests around the world sequestered an average of 7.3 GtCO2e per year. When these forests are removed, the carbon sink provided by them is also lost, reducing future carbon removals.

Halting forest loss in the Declaration’s signatory countries will secure the carbon removals that would have been lost had the current pace of forest loss continued. The carbon removals that would have been forgone under the business-as-usual scenario are approximately 0.47 GtCO2e by 2030 — equivalent to the removal of one year’s worth of  CO2e emissions from manufacturing and construction in the U.S.

Climate Benefits from Restoration

The goal of the Glasgow Declaration is not just to halt forest loss and land degradation, but to “reverse” it. Signatories pledged to strengthen efforts to accelerate the restoration of forests and other terrestrial ecosystems, but stopped short of setting a quantitative target for how much to restore. Many of the signatory countries have also made commitments under the Bonn Challenge, which has a goal of bringing 350 million hectares of degraded and deforested landscapes into restoration by 2030.

Restoration of forests, mangroves and peatlands offers great climate mitigation potential, in addition to the emissions avoided by halting their loss or degradation. To demonstrate the magnitude of this potential, here are estimates on the amount of carbon dioxide that could be removed annually from the atmosphere by 2030 from several forms of restoration (via a recent report on the transformations required to limit global warming to 1.5 degrees C):

  • 3.0 GtCO2e from reforesting 259 million hectares,
  • 0.4 GtCO2e from restoring 22 million hectares of peatlands,
  • 0.2 GtCO2e from restoring 7 million hectares of coastal wetlands.

Socially and ecologically conscious restoration will require close collaboration with communities that own or use land. Regional networks of community organizations, investors and governments — like Initiative 20×20 in Latin America and the newly relaunched AFR100 in Africa — can help to share knowledge and channel large financial commitments, such as The Bezos Earth Fund allocation of $1 billion for restoring landscapes, to local entrepreneurs and community groups working to restore land.

This Isn’t the First Pledge on Forests. What Will Make the Outcome Different?

What will prevent the Glasgow Declaration and related pledges from suffering the same fate as previously unmet forest commitments? To be sure, many of the same countries also signed the 2014 New York Declaration on Forests which pledged to halve deforestation by 2020 and end it completely by 2030. Despite some progress, the latest assessment shows signatories are still far from achieving this objective. For the Glasgow Declaration to succeed, its goals need to be embedded in new ways of doing business, and countries must feel fully accountable for achieving them.

Moving beyond a paper pledge to impact will require countries to work in concert to drive system change across all five areas of “transformative action” listed in the declaration: sustainable production and consumption; infrastructure; trade; finance and investment; and support for smallholders, Indigenous peoples and local communities, and their role in forest stewardship.

For this to happen, countries and companies must be accountable for following through on their pledges. They should develop clear implementation plans, specify measurable performance indicators, and set specific milestones of achievement on the pathway to 2030 goals. They should openly and regularly monitor, report and verify their progress. They should also be more transparent — the boundaries and owners of land-use permits or licenses should not be secret and companies should trace and disclose the origins of commodities they purchase.

While the Glasgow Declaration and related pledges are a welcome affirmation of political will to reduce deforestation and pivot to more sustainable land use, we’re watching for action.


Estimates of forest loss are derived using data from Hansen et al. 2013Curtis et al. 2018, and  Turubanova et al. 2018; estimates of avoided emissions were calculated based on forest greenhouse gas fluxes data from Harris et al. 2021.

Carbon Market Rules Formally Enshrined in Glasgow Package

Published 11:27 GMT on November 13, 2021  /  Last updated at 19:38 GMT on November 13, 2021

GLASGOW | 13 November 2021 | In approving the Glasgow Package, world leaders have formally approved rules for implementing Article 6 of the Paris Climate Agreement. The rules were finalized Saturday morning, and the package was adopted in the final plenary of the 26th Conference of the Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC) here.

Article 6 itself was ratified along with the rest of the Paris Agreement in 2016, but the rules for implementing it proved complex and elusive.

Article 6 covers the ways countries can work together to generate deeper emission reductions and produce more ambitious national climate action plans, called “Nationally Determined Contributions” (NDCs) to the Paris Agreement. It includes cross-border compliance carbon markets, described as “ITMOs” (Internationally-Transferred Mitigation Outcomes).

The final agreement resolves sticky issues associated with paragraphs 2 and 4 of the article. Paragraph 2 covers bilateral carbon trades, while paragraph 4 covers the centralized hub that replaces the Kyoto Protocol’s Clean Development Mechanism (CDM).

To avoid double-counting of emission reductions, the Paris Agreement calls for rules on applying “corresponding adjustments” of national carbon inventories when one country uses ITMOs to reduce its carbon footprint. This can happen at the government level, as when Switzerland purchased ITMOS from Peru, but is more likely to happen at the corporate level, when a company in one country purchases ITMOs from abroad to meet compliance criteria at home.

Voluntary carbon markets are also designed to reduce overall emissions, but the transactions themselves are not registered in national carbon accounts. As a result, they do not require corresponding adjustments at this time. This is a subject we will revisit in the coming days.

Paragraph 6.2 Summary

Click here to view the text

Article 6.2 covers rules for bilateral and multilateral transfers between countries. In the early days of the Glasgow talks, the most contentious issue focused on whether or not to implement a transaction fee to pay for adaptation in developing countries. Such a “share of proceeds” provision exists in Paragraph 6.4, which focuses on the creation of a central hub to replace the Kyoto Protocol’s Clean Development Mechanism (CDM). Most developed countries pushed back on this provision, arguing that it was impossible to implement in a unified and fair way given the diversity of approaches being developed.

The transaction fee doesn’t appear in the current draft, but there is an invitation for the Adaptation Fund “to report in its annual reports to the CMA on funding related to participation in cooperative approaches pursuant to paragraph 36 of chapter VII of the annex (Ambition in mitigation and adaptation actions).”

The corresponding adjustments are easier for multi-year NDCs because they run on a carbon budget approach similar to the Kyoto Protocol, making the account easier. Single-year NDCs are more difficult and will need more technical work. This will be taken up by the Subsidiary Body for Scientific and Technological Advice (SBSTA), which is a technical negotiating track that accepts requests from the Conference of the Parties (COP) and also helps inform the next meeting’s agenda. Among these are the treatment of corresponding adjustments after 2030 and whether ITMOs can include reductions or be limited to removals.

The Intergovernmental Panel on Climate Change (IPCC) has concluded that we must dramatically increase removals by 2050 to meet the climate challenge, and there is an active debate among NGOs as to how to strike the balance between strategies that use ITMOs to support reductions and those that use them to support removals.

Paragraph 6.4 Summary

Click here to view the text

Paragraph 6.4 covers the creation of a centralized hub to replace the CDM, and the biggest points of contention coming into Glasgow were whether countries would have to correspondingly adjust their carbon accounts when transferring emission reduction abroad and the degree to which Certified Emission Reductions (CERs) generated under the CDM could be applied towards NDCs.

The proposed text sets out criteria for countries to use CERs from projects registered after January 1, 2013 to meet their first NDC or first adjusted NDC, with no corresponding adjustment since the CDM predates that requirement. It designates a 12-member Supervisory Body to oversee the emerging hub and tasks it with reviewing baselines of recognized credits.

Earlier in the week, negotiators had agreed to require corresponding adjustments on all new emission reductions generated under Paragraph 6.4, breaking a logjam that had existed since 2015.

Experts Speculate that Article 6 Rules will Pass Once Finance Package is Agreed

GLASGOW | 12 November 2021 | Negotiators and observes are increasingly optimistic about the prospect of achieving a viable set of rules for implementing Article 6 of the Paris Agreement before year-end climate talks (COP26) end here over the weekend, although some details may be put to a working group for consideration over the course of the year.

“In this morning’s text, the principle decisions are all there, and I assume Article 6 will go to plenary once the finance decisions are reached,” said former Dutch negotiator Jos Cozijnsen, who now serves as a legal advisor to the Carbon Neutral Group.

Norwegian Prime Minister Jonas Gahr Støre seemed to make a similar statement when he told the Norwegian Broadcasting Corporation that “If we get the financing done, Article 6 will be done as well.”

Ecosystem Marketplace was unable to speak directly with Støre.

Cozijnsen acknowledged that some sticky issues remain – primarily whether to charge a transaction fee on internationally-transferred mitigation outcomes (ITMOs) under Article 6.2 of the Paris Agreement to fund adaptation, and the fate of old Clean Development Mechanism (CDM) credits.

“I can see an agreement in principle on both issues, with details put off to a working group,” he said.

A transaction fee already exists under Article 6.4, which covers the central hub for transferring credits, but Article 6.2 is more challenging because of the diversity of arrangements. The US state of California and the Canadian province of Quebec, for example, already engage in cross-border trading, while several “carbon clubs” are in various stages of development around the world.

“It would be hard to implement, but not impossible, and there comes a time where you just have to say, ‘Let’s make a deal,’” Cozijnsen said.

It is not uncommon for rulebooks to be approved with some provisions assigned to working groups for the following year, and Cozijnsen added that a triage mechanism could be created for old CDM credits, with only some of them going into the 6.4 hub.

Adaptation funding increased dramatically in Glasgow, with $351 million being pledged for the adaptation fund and the broader negotiating text calling for the creation of a dedicated agency to manage climate-linked loss and damage within two years.

This would be separate from the $100 billion per year for both adaptation and mitigation that rich countries have pledged to developing countries – a pledge that looks likely to finally be achieved in 2022.


Breaking: New Carbon Markets Text Shows Progress on Article 6.4, but 6.2 Remains Stalled

GLASGOW | 12 November 2021 | As year-end climate talks enter their final day, clear rules have emerged for internationally transferred mitigation outcomes (ITMOs) transferred via a central hub under Article 6.4 of the Paris Agreement, which is now seen as the successor to the Kyoto Protocol’s Clean Development Mechanism (CDM).

As a negotiating text, this is subject to change.

The new text for Article 6.4 shows agreement on the need for host countries to apply a corresponding adjustment for emissions reductions transferred via the hub, as Brazil agreed to drop its insistence on a grace period for such adjustments, abandoning a stance it had held since the Paris Agreement was signed in 2015.

For background, see “Will Double-Counting Dust-Up Crush Katowice Climate Conference?

Meanwhile, several negotiators have told Ecosystem Marketplace that they see Article 6 as neutral on whether corresponding adjustments should be required for voluntary transactions, which is contrary to the interpretation many market participants have made.

“In Article 6, there is a differentiation between offsets that take place inside an NDC and outside an NDC, but that’s related to aviation and other semi-compliance markets and not to voluntary markets,” said one negotiator, speaking on condition of anonymity.

“The issue of corresponding adjustments and voluntary markets has been overblown,” he said.

There are still several unresolved issues, including provisions for imposing a transaction fee on transfers that take place under Article 6.2, which governs bilateral trades between countries. The transaction fee, technically referred to as a “share of proceeds” (SOP) provision, is intended to fund adaptation in developing countries. Such a fee is already included in the centralized hub under 6.4, but many say it would be unworkable in a multilateral market under Article 6.2.

The second issue is roughly 4 million tons of emission reductions generated under the Kyoto Protocol’s Clean Development Mechanism (CDM). Countries that generated many of these credits, including Brazil, China, and South Korea, want them to be recognized under Article 6.4, while most other countries do not.

Carbon Market Talks Remain Stalled

GLASGOW | 11 November 2021 | Ministers released a negotiating text for Article 6, which deals with international carbon markets, but the rules are virtually unchanged since Saturday, with areas of disagreement in brackets. You can find the documents here:

At issue is the treatment of transactions outside of NDCs and whether a transaction tax should be imposed on bilateral transactions to support adaptation.

Unlike years past, we are avoiding the gossip surrounding these final days and awaiting a concrete outcome.

Voluntary Carbon Markets Top $1 Billion in 2021 with Newly Reported Trades,
a Special Ecosystem Marketplace COP26 Bulletin

10 November 2021  |  As the UN Climate Change talks at COP26 continue this week, Ecosystem Marketplace (EM) has prepared this special State of the Voluntary Carbon Markets (SOVCM) bulletin update from our first installment of SOVCM 2021 that was published on September 15th. This bulletin follows our commitment to expand our Global Carbon Hub by working more consistently with carbon credit market participants and stakeholders as an on-demand centralized repository of over the counter (OTC) and exchange-based trades, more regular EM publications with updates on the latest trades and trends in carbon markets, and more intelligent access to EM Data via EM’s online data dashboards and tools.

In addition to EM’s unique offering of VCM and compliance market trade data and insights from a global network of nearly 180 EM Respondents reporting on projects located in over 80 countries, the EM Data Intelligence & Analytics Dashboard includes data from 14 carbon standards’ registries, as well as corporate climate commitment and carbon credit claims insights (in testing within the EM Respondent version only at this time). Contact us here to speak with our team for a demo.

The headline from ‘Markets in Motion’, State of the Voluntary Carbon Markets 2021, Installment 1, was that the size of the voluntary carbon market was on track to hit (and exceed) $1 billion in value by the end of 2021 within a calendar year for the first time in EM’s 16-year history tracking the markets. This was based on data demonstrating that total 2021 VCM value was already at $748 million (as reported by EM Respondents by August 31), which was just shy of the first three quarters of the year.

Based on recently reported trades by EM Respondents (listed below), the VCM has now exceeded the $1 billion milestone. These additional 59.1 MtCO2e of 2021 VCM carbon credit trades have a corresponding market value of $258.2 million. Note, this data is a combination of carbon credit trades for the full calendar year, if they hadn’t yet reported to EM in 2021, and newly contracted trades since August 31st, which was the cutoff reporting date for the first installment.

When breaking down the newly reported 2021 transactions into their underlying categories, we again see that Forestry and Land Use credits and Renewable Energy credits dominate volume traded. Forestry and Land use credits account for 61% while Renewable Energy credits account 38% of transactions reported.

Projects with accompanying co-benefits have again fetched a higher average weighted price at $5.95 per tonne while projects without had a weighted average price of $2.77 per tonne.

What else you need to know

These additional transactions occurred throughout 2021, not exclusively since August 31, as EM Respondents catch up on reporting transactions throughout the year. It is important to note that this latest data comes from a small but important subset of respondents; we made a special request to our network of respondents to provide updates to inform COP26. This new data comprises only 15 respondents, 3 of which told the EM team that they were sold out and won’t have new trades to report until their next issuance.

The full set of 2021 transactions will be fully compiled likely by the end of Q1 2022 to accommodate EM Respondents that report at an annual frequency. However, even this updated set of transactions, representing less than 10% of the respondents that provided data for the previous report, increased the total volume traded in 2021 by an additional 20% and an increase in 35% of the previously reported market value.

It should be noted also that additional trades reported by these EM Respondents increased 2020 volumes by 71.6 MtCO2e at a value of $309.5 million for an average weighted price of $4.32 per ton.

Draft Decision Shows No Progress on Carbon Markets

GLASGOW | 10 November 2021 | Ministers released a negotiating text as year-end climate negotiations enter their final phase, but the draft shows no progress on two thorny issues: how to measure and report emissions back to the UNFCCC and how to manage international carbon markets under the UNFCCC.

The rules for three key carbon market articles are virtually unchanged since Saturday, with areas of disagreement in brackets. You can find the documents here:

At issue is whether national governments will have to correspondingly adjust their carbon inventories to reflect voluntary carbon market transactions and whether a transaction tax should be imposed on bilateral transactions to support adaptation.

Carbon Market Negotiations Move to High-Level Negotiators

GLASGOW | 8 November 2021 | The draft text on implementing Article 6 of the Paris Agreement has passed from the technical negotiating track to the policy-level negotiating track with the same key issues still unresolved – namely, the role of corresponding adjustments, the fate of old Kyoto credits, and the shares of proceeds from trading markets.

Article 6.2 covers internationally-transferred mitigation outcomes (ITMOs) between countries; Article 6.4 covers the creation of a centralized hub; and Article 6.8 covers non-market mechanisms.

Here are the Saturday afternoon texts that were passed to high-level negotiators:

Share of Proceeds

One area of contention is whether to impose a global transaction tax on cross-border carbon transactions under Article 6 in order to fund general adaptation in developing countries. Such a tax is embedded in Article 6.4, where the disagreement isn’t over whether it should exist but how high it should be. A proposal to implement such a tax on all transactions, however, drew pushback from developed countries, primarily the United States and Europe. They argue that such a tax would be unmanageable, while developing countries have countered it’s no less manageable than is the challenge of tracking emission reductions. One proposal calls for a global registry to not only track trades to prevent double-counting but also to coordinate a transaction tax.

Corresponding Adjustments

While everyone agrees that corresponding adjustments should be required for emission reductions that pass between countries for compliance purposes, there is disagreement over how to handle reduction credits that take place outside a country’s NDC, including in voluntary markets.

Developing countries generally don’t want corresponding adjustments applied to voluntary markets because it means they will be transferring their emission reductions abroad. Developed countries do want them because they see it as a way of avoiding double counting.

Negotiators are exploring the creation of a “bridging mechanism” that will eventually require corresponding adjustments for voluntary markets as well, but the proposals, which are bracketed in the negotiating text, are diverse and often incompatible.

The argument in favor of requiring corresponding adjustments on voluntary transactions centers on concerns with the ways emissions are accounted for with countries, says Chirag Gajjar, who heads the sub-national climate program for the World Resources Institute (WRI) in India.

“It’s a legitimate concern because a lot of countries need capacity building for that,” he said.

Jos Cozijnsen, a longtime Dutch negotiator who now serves as an attorney and consultant to the Climate Neutral Group, disagrees.

“Corresponding adjustments make sense for compliance offsets and for some specific offsets outside NDCs, such as CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), but not for voluntary transactions,” he says.

He argues that calls for corresponding adjustments on voluntary transactions are a remnant of “old Kyoto rhetoric” and a misunderstanding of the intricacies of carbon accounting on the part of some NGOs and governments.

“Under the Kyoto Protocol, companies looked for offsets that were additional to country budgets, but the Paris Agreement doesn’t have these,” he said.

As we now move to week 2, the discussions will be held mostly at the ministerial level on all major items. The following ministers are assigned to facilitate respective theme, some have already started the work:

1.5°C ambition
Facilitator: Grenada and Denmark

Loss and Damage
Facilitator: Jamaica and Luxembourg

Facilitator: Sweden and Egypt

Facilitator Minister: Antigua & Barbuda and New Zealand

Common Time Frame
Facilitator Ministers: Rwanda and Switzerland

Facilitator Ministers: Maldives and Spain

For a deep dive into the intricacies of Article 6, check out Episode 71 of the Bionic Planet Podcast, available on all podcatchers, including iTunes, TuneIn, and Stitcher, as well as on this device here:

New Global Partnership Opens Door for Indigenous People, Traditional Owners and Local Communities to Directly Benefit from Private Climate Finance

  • Peoples Forests Partnership members seek to mobilize $20 billion per year by 2030 in direct private investment in community-driven forest conservation and restoration projects, and set a high standard for equitable, accessible, and culturally appropriate mechanisms for forest communities to engage with climate finance.   
  • As tropical forest guardians, Indigenous Peoples, traditional owners, and local communities (IPLC) are essential partners for governments and countries in order to meet Paris Agreement goals.   

November 7, 2021 / The Peoples Forests Partnership, announced today at the United Nations climate summit (COP26), aims to fix a fundamental flaw in carbon financing by directing significant private funding to forest communities to reward their efforts to successfully stop deforestation.   

The Partnership will include Indigenous organizations, conservation groups, companies, and investors and seeks to mobilize and direct billions of dollars in private and public-sector investments to community-based forest conservation projects. While closing a major equity gap in climate finance, the partnership will support meaningful contributions toward Paris Agreement targets, voluntary corporate climate commitments, and Nationally Determined Contributions (NDCs).  

This announcement follows a November 1 pledge by a coalition of governments and philanthropic donors to channel $1.7 billion to IPLC, with a focus on improving tenure security. The Peoples Forests Partnership will provide a complementary platform for companies and investors to invest in community-based, values driven forest conservation and restoration projects.    

The platform will support both performance-based payments (such as for carbon credits) as well as other climate funding mechanisms, including a financing facility specifically focused on strengthening territorial governance to be managed by Partnership member Forest Trends.  

Role of IPLC in meeting Paris Agreement goals  

Indigenous peoples, traditional owners, and local communities (IPLC) safeguard vast reservoirs of forest carbon. Worldwide, IPLC manage more than one-fifth of the forest carbon stored in tropical and subtropical countries.1 Indigenous communities have proven to be the world’s most effective guardians against tropical deforestation. Indigenous territories in the Amazon lost less than 0.1% of their aboveground carbon stocks between 2003-2016, compared to 3.6% for other lands.2   

IPLC stewardship of forests comes at increasing costs: forest defenders face accelerating violence, political repression, and deforestation and degradation pressures from fires, agricultural interests, logging, mining, land grabbing, and other illegal activities on indigenous and other forest communities’ lands. Yet, these communities receive virtually no climate finance to support their efforts: International aid supporting IPLC forest protection is equal to less than 1% of overall Official Development Assistance for climate mitigation and adaptation.3   

Peoples Forests Partnership Aims  

The Peoples Forests Partnership aims to mobilize at least $20 billion per year in long-term, private-sector investments as well as public funding, and channel it directly to forest community projects by 2030. This could reduce CO2 emissions from deforestation each year by at least 2 billion tonnes, protect at least 500 million hectares of threatened tropical forest and their biodiversity, and support livelihoods and bioeconomy development for over 50 million people in forest communities.  

In the coming year, additional Partnership goals are to mobilize funds for capacity-building for forest communities so they can fully participate in and benefit from carbon finance, and to advance new alternative financing instruments including for high-carbon low-deforestation forests that are particularly difficult to finance through current mechanisms.   

The facilitating members of the Peoples Forests Partnership are Forest Trends, RECOFTC, Wildlife Works Carbon, Everland, and GreenCollar. The members collectively represent a portfolio of community-based forest conservation projects in more than a dozen countries across Latin America, Africa, Southeast Asia, and the Pacific.   

In total, the current members have secured initial financing for a portfolio of projects that will generate $2 billion in private investment and at least 20 million tonnes per year of Verified Emission Reductions. Globally, the financing is being channeled to a quarter million indigenous and other forest community members already managing over two million hectares of tropical forests.   

Call for Expressions of Interest  

From today, the Partnership is actively seeking expressions of interest from organizations and individuals from forest communities, business, government, philanthropy, and civil society.   

A consultation period also invites interested stakeholders to offer their input on documents of engagement, including membership criteria for high-integrity community-based projects and operating principles. A draft set of documents has been developed in consultation with select Indigenous Peoples leadership and other stakeholders.

Mateo Estrada, Organization of Indigenous Peoples of the Colombian Amazon (OPIAC); lead author of the Peoples Forests Partnership’s consultation document on Working with Indigenous Peoples, Traditional Owners, and Local Communities on Climate & Conservation Finance Projects, said:  

“We, the indigenous peoples of the Colombian Amazon and the South American Amazon are very important for humanity, because we are the bearers of the knowledge to keep nature intact. It is for this reason that indigenous peoples have decided to coordinate with the Peoples Forests Partnership in their work to drive resources directly to indigenous management, so that [indigenous peoples] can improve their quality of life, improve their economy, improve their health, improve their vocation, so that women can participate, and so young people can have a better future.  

“We want to be part of this, and we are already part of it, because we have participated in its design. We hope that companies, governments, and international organizations can support this great initiative.”  

Beto Borges, Director of Forest Trends’ Communities and Territorial Governance Initiative, a facilitating member of the Peoples Forests Partnership, said:  

“We cannot achieve Paris Agreement goals without our Indigenous and forest community partners. The world is beginning to realize this truth. We welcome recent government and philanthropic commitments to increase aid to IPLC. The Peoples Forests Partnership provides a complementary platform for increasing private-sector investment in community-based forest projects at meaningful scale with long-term durability.   

“The climate finance system is still not designed to work with indigenous and traditional peoples, at a moment when they should be at the center, as equal partners in the battle against climate change. New flows of finance must reach IPLC directly and must come hand in hand with consultation as recommended in the Cancun Safeguards.”  

David Ganz of RECOFTC, a facilitating member of the Peoples Forests Partnership, said:  

“Very little climate finance directly benefits forest communities. Systems like REDD+ can be difficult for communities to navigate. Safeguards and requirements for free, prior, and informed consent are inconsistently followed. Benefits-sharing programs are not designed in culturally appropriate ways.”  

Francisca Arara, President of the Regional Committee for Indigenous Peoples and Traditional Communities, Governors Climate and Forests Task Force, and former Political Advisor for the Association of the Movement of Indigenous Agroforestry Agents of the State of Acre, Brazil, said:  

“The root of the problem is this: whoever deforests the most, earns the most. And whoever preserves, sometimes they don’t earn anything. This situation exposes the problems of climate funding. It is difficult for indigenous peoples to access these resources. Indigenous women receive even less. The world needs to know the work we do in the forests, for the climate, for the planet, and for the world. The world needs to know our culture.”  

Seraphine Charo, Carbon Committee Representative, Wildlife Works Kasigau Corridor REDD+ Project, Marungu, Kenya, said:   

“When a member of a forest community can feel the recognition from an international audience that becomes very empowering, and it gives more motivation for them to continue with their efforts. The next step is for that voice to be heard during discussions and decision making about forest conservation and climate change. It is also very important that funding for forest conservation reaches them on the ground.”  

Mike Korchinsky, Founder and CEO of Wildlife Works, a facilitating member of the Partnership, said:  

“Wildlife Works has been working directly with forest communities to protect their natural environment for over 20 years and we have seen firsthand how hard it is for them to access climate finance, and how transformative it can be when they succeed. This partnership is positioned to dramatically scale the supply of market and non-market climate finance flowing directly to forest communities, so they can play their essential role in creating global solutions to climate change.”  

Joshua Tosteson, President of Everland, a facilitating member of the Partnership, said:

“At COP26 the leaders of the world have now agreed to end deforestation. But how will we accomplish this? Because forest conversion is driven by economic forces, we’ll only successfully halt deforestation if we create meaningful, durable value for forest stakeholders by keeping the forests standing, especially for the local and indigenous communities who safeguard most of the world’s remaining forests. Community-based initiatives to stop deforestation and degradation (REDD+), supported by private sector market finance, have already delivered hundreds of millions of tonnes of emissions reductions over the past decade through a ‘bottom-up’ approach that directly addresses the drivers of deforestation active in highly threatened forest areas. Through the Peoples Forests Partnership, we aim to scale this successful model by recognizing the central role of IPLCs in addressing our planetary emergency. Everland is proud to be a facilitating member of this partnership.”

Robert O’Sullivan, Chief Adviser, International Markets, GreenCollar Group, a facilitating member of the Partnership, said:  

“If IPLCs receive direct and equitable access to climate finance there is tremendous potential to rapidly protect and restore international forests at scale and help meet the global pledges to halt deforestation by 2030. IPLCs are not limited to small, isolated projects. Indigenous and traditional communities manage global forest carbon stores equal to at least 33 times the worlds’ energy emissions in 2017. This under-represents the amount of stored carbon managed by IPLCs, and these forests are at risk if we do not move quickly to support communities in protecting them.”   


Article 6 Negotiations to Resume Saturday Morning

GLASGOW | 5 November 2021 | Article 6 negotiators this morning released new negotiating text for articles 6.2, which covers internationally-transferred mitigation outcomes (ITMOs), article 6.4, which covers the creation of a centralized hub, and article 6.8, which covers non-market mechanisms.

Negotiations then continued through the day, with an emphasis on crystallizing the language around areas of disagreement to be passed up to the higher-level negotiations next week – namely, the role of corresponding adjustments under both Articles 6.2 and 6.4, the fate of old Kyoto offsets under Article 6.4, and the shares of proceeds from a centralized market developed under Article 6.4, as well as the governance structure for that entity.

One of the more interesting developments is the emergence of Article 6.8 as a possible home for many of the sectoral pledges and initiatives that have emerged recently.

Article 6.8 was introduced in the closing days of the Paris climate talks at the insistence of Bolivia, which had taken a position opposed to market mechanisms. It calls for the need to recognize “integrated, holistic and balanced non-market approaches being available to Parties to assist in the implementation of their nationally determined contributions, in the context of sustainable development and poverty eradication, in a coordinated and effective manner, including through, inter alia, mitigation, adaptation, finance, technology transfer and capacity building, as appropriate.”

The final negotiating text is due Saturday, but there is a chance it could be delayed.

Here are the Friday morning texts:

For a deep dive into the intricacies of Article 6, check out Episode 71 of the Bionic Planet Podcast, available on all podcatchers, including iTunes, TuneIn, and Stitcher, as well as on this device here:

UN Tourism Agency Sees Net-Zero Tourism Globally Through Ecological Restoration, Innovative Finance

GLASGOW | 4 November 2021 | The World Tourism Organization (UNWTO), which is the United Nations specialized agency charged with promoting sustainable tourism, today unveiled the “Glasgow Declaration for Climate Action in Tourism” at the UN Climate Change Conference (COP26) here.

The Declaration commits companies to cut their emissions in half by 2030 and achieve net-zero emissions by 2050, with all residual emissions being absorbed through ecological restoration by 2050 at the latest.

More than 300 stakeholders are represented in the declaration, largely through the World Travel & Tourism Council (WTTC), which represents more than 70 percent of global tourism.

“The commitment is to not only reduce the footprint by changing business as usual operations but also offsetting…through blue carbon, for example,” said UNWTO Executive Director Zoritsa Urosevic in an interview with Ecosystem Marketplace.

She added that ecological restoration is particularly important to the tourism sector, which depends on natural beauty for its survival, and she said the UNWTO is in the process of launching a net-zero tourism fund, with contributions from tourists being matched by tour operators.

UNWTO Secretary-General Zurab Pololikashvili conceded the gains that individual companies have made but stressed the need for a sector-wide effort involving government and international organizations as well.

“The Glasgow Declaration is a tool to help bridge the gap between good intentions and meaningful climate action,” he said.

Urosevic described an ambitious strategy for using tourism to promote regeneration, especially of coral reefs, but emphasized it would take time to get there.

“That’s the ambition, but we’re not there yet and we need your help,” she said.

“We need everyone’s help,” she added.

To hear our full conversation with UNWTO Executive Director Zoritsa Urosevic, check out episode 70 of Bionic Planet, available on all podcatchers, including iTunes, TuneIn, Stitcher, and this device here:

Here is a list of the initial signatures to the declaration:

  • Accor
  • AITO – The Specialist Travel Association
  • ANVR – Dutch Association of Travel Agents and Tour Operators
  • Asian Ecotourism Network
  • Panama
  • Barbados
  • Bilbao Convention Bureau
  • Bucuti & Tara
  • Cairngorns National Park Authority
  • Dallas Fort Worth Airport
  • ETOA – European Tourism Association
  • Forum Anders Reisen
  • Future of Tourism Coalition
  • GSTC – Global Sustainable Tourism Council
  • Iberostar Group
  • Innovation Norway
  • Intrepid Travel
  • Legacy Vacation Resorts
  • Much Better Adventures
  • Netherlands Board of Tourism & Conventions
  • NECSTouR – Network of European Regions for Sustainable and Competitive Tourism
  • Organisation of Eastern Caribbean States
  • Pacific Tourism Organization
  • Federated States of Micronesia
  • Skyscanner
  • Sustainable Hospitality Alliance
  • The Long Run
  • Tourism Authority of Kiribati
  • Travalyst Limited
  • VisitScotland
  • World Travel & Tourism Council (WTTC)

LEAF Says it’s Hit its $1 Billion Target

GLASGOW | 2 November 2021 | The LEAF Coalition (Lowering Emissions by Accelerating Forest Finance) says it has achieved its goal of mobilizing $1 billion for countries and states looking to reduce greenhouse gas emissions associated with deforestation and degradation of forests (REDD+).

The achievement was announced today at the World Leaders Summit, which is the opening segment of the 26th Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC).

LEAF is a voluntary global coalition bringing together the private sector and governments to provide finance for tropical and subtropical forest conservation commensurate with the scale of the climate change challenge. Reversing deforestation is essential to achieve the goals of the Paris Agreement and for any pathway to a 1.5-degree future.

Costa Rica, Ecuador, Ghana, Nepal, and Vietnam will sign the first Letters of Intent with Emergent, which is acting as the intermediary for the Coalition.

Seven new buyers also joined the coalition: BlackRock, Burberry, EY, Inditex, Intertek, SAP, and They join Amazon, Airbnb, Bayer, BCG, Delta Air Lines, E.ON, GSK, McKinsey, Nestlé, PwC, Salesforce, and Unilever, as well as several governments, including the United Kingdom.

“The UK is proud to be part of this ambitious coalition that is massively scaling up the amount of finance available to support efforts to stop deforestation, cut global greenhouse gas emissions and put nature on the path to recovery,” said UK Prime Minister Boris Johnson.

Reductions are measured and verified to an independent third-party standard called The REDD+ Environmental Excellency Standard (TREES), developed by the Architecture for REDD+ Transactions (ART). Forest protection programs that operate across entire states matter not only for achieving results at scale, but also because acting at the jurisdictional level supports critical public policies to address deforestation.

As required by TREES, before funding is provided, independent third-party validators will ensure total deforestation across a jurisdiction has been reduced, that efforts to reduce deforestation have not negatively impacted local communities, and that plans are in place to equitably share benefits with local communities.

For more details on LEAF:

United States Joins Global Effort to Forge Sustainable Ocean Economy

GLASGOW | 2 November 2021 | The United States has joined the High Level Panel for a Sustainable Ocean Economy (Ocean Panel), which is comprised of 14 nations representing nearly 40 percent of the world’s coastlines, 30 percent of its exclusive economic zones (EEZs), 20 percent of its fisheries, and 20 percent of its shipping fleet.

Members of the Ocean Panel coordinate policies with the goal of creating a “sustainable ocean economy” across their jurisdictions. The organization has endorsed sustainable management of wild fish stocks as well as the deployment of carbon capture and storage in the sub-seabed through growing and sinking massive kelp beds. Such strategies sequester carbon in sub-seabed geological formations, but there have been fears of unexpected consequences if they are not deployed properly and with international cooperation.

“I have long followed the work of the Ocean Panel, and I am in complete agreement that creating a sustainable ocean economy, informed by the latest science, is essential to secure a prosperous future for our communities and for our planet,”  said John Kerry, the US Special Presidential Envoy for Climate.

Co-chaired by Norway and Palau, the Ocean Panel includes Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau, and Portugal.

The panel had earlier published a 24-page roadmap to achieving a sustainable ocean economy, with 100 percent of the oceans under their jurisdictions operating under Sustainable Ocean Plans by 2025.

The document sets several goals to be achieved by 2030, including the restoration of wild fish stocks to sustainable levels and the reduction of dead zones caused by excess agricultural runoff that nourishes massive algae blooms. The roadmap also calls for increased farming of seaweed for food, fuel, and sustainable plastic alternatives, in addition to carbon capture.

New Effort to Fast-Track $2 Billion for African Forests by Next COP

GLASGOW | 2 November 2021 | Africa has lost more than 700 million hectares of forest since the beginning of the colonial era, and several donor groups have joined African finance ministers in a push to raise $2 billion within the coming year for the restoration of 100 million hectares under the African Forest Landscape Restoration Initiative (AFR100).

AFR100 was launched by several African countries in 2015 with the goal of restoring 100 million hectares by 2030 in support of the Bonn Challenge, the New York Declaration on Forests, and the African Resilient Landscapes Initiative, each of which has differentiated but overlapping commitments to restore forests. The coalition has since grown to 31 countries pledging to restore 128 million hectares of degraded forest.

The short-term objective of raising $2 billion was initiated by the environment ministers of three countries – Jeanne d’Arc Mujawamariya of Rwanda, Nancy Tembo of Malawi, and Mohammad Abubakar of Nigeria – and is now backed by several donors, including the African Development Bank, the Government of Germany, the  Global Environment Facility, the Bezos Earth Fund, the Global EverGreening Alliance, and the Green Climate Fund.

The donors have jointly pledged to scale up investment in land restoration across Africa by 2026 through the TerraFund for AFR100. That initiative aims to finance African non-profit community organizations and for-profit businesses that are restoring trees to suitable African landscapes. They will provide funding of $50,000 to $500,000 in the form of grants and loans to each of these innovators.

After receiving more than 3,200 applications for funding across 31 African countries, the World Resources Institute (WRI), One Tree Planted and Realize Impact will provide 100 grants and loans of $50,000 USD to $500,000 USD to community-based non-profits and local businesses. The first cohort of 20 organizations that will receive capital from the TerraFund was announced yesterday.

The next Conference of the Parties (COP) to the UNFCCC will be held in Africa, probably Egypt.

The most recent report by the Intergovernmental Panel on Climate Change (IPCC) shows that several African regions like the Sahel will experience rising temperatures, exacerbating the vulnerabilities of people and nature. If desertification continues to advance unchecked, the decline in revenue from cereal crops alone could cost people in Africa $4.6 trillion through 2030.

An initial $2 billion investment in the work of NGOs, entrepreneurs and government-led projects could catalyze $15 billion of funding, according to the World Resources Institute (WRI). That larger sum could begin the restoration of a potential 20 million hectares by 2026 and bring an estimated $135 billion in benefits to 40 million people, according to WRI analysis.

“Local communities own and manage nearly 70 percent of Africa’s land,” said Wanjira Mathai, who oversees WRI’s activities in Africa. “That is why a future where rural Africa’s landscapes are fully restored is only possible if we believe in and fund the work of thousands of community groups and leaders, especially young people, women, and entrepreneurs.”

Despite plenty of attention for the Great Green Wall, no one really knows how much land the massive project has restored. Partners in AFR100 say they will independently monitor and report on each project with a combination of field verification techniques and satellite monitoring with support from the new Land & Carbon Lab initiative.

“AFR100 presents an opportunity for both the private and public sectors to demonstrate large-scale transformative action to restore degraded land,” said Charles Karangwa, Regional Head of Land Systems for Africa, International Union for Conservation of Nature (IUCN). “That action would not only mitigate climate change, but also help secure millions of livelihoods and agricultural supply chains. Diversified financing instruments are needed now if we are to achieve this grand ambition by 2030,”

Climate Finance and Article 6 Feature Prominently in Early Glasgow Days

GLASGOW | 2 November 2021 | World leaders have set an ambitious agenda for the 26th Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) here, with developing nations making both more promises and more demands and developed nations offering more finance than in years past.

What is the Future for Carbon Credits in the UN System?

At press time, the Subsidiary Body for Scientific and Technological Advice (SBSTA) has just released a new draft negotiating text for Article 6 of the Paris Agreement. Article 6 is the portion of the Paris Agreement focused on cooperative mechanisms, including cross-border carbon transactions. SBSTA is a negotiating track within the UNFCCC that focuses on technical issues. It is chaired by Tosi Mpanu Mpanu of the Democratic Republic of the Congo, who is charged with forging an agreement that can be passed up to ministers next week at the COP itself. Negotiating texts are rough drafts of the final agreement, with all areas of disagreement included, but in brackets. It is not uncommon to see long texts with multiple and contradictory statements in brackets in the early days before the areas are boiled down over the course of the week.

Article 6 negotiations are focused on three key elements: rules for carbon credits that cross borders (Internationally-Transferred Mitigation Outcomes, “ITMOs”), specifically when to apply corresponding adjustments; rules for a centralized hub to handle ITMOs, and means of implementing non-market procedures.

Here are links to the negotiating texts for three paragraphs of Article 6:

Article 6.2 (related to ITMOs):

Article 6.4 (related to a central ITMO hub):

Article 6.8 (related to non-market mechanisms):

A clean draft is expected by Saturday.

Signals from On High: Anger and Offerings

If the high-level pledges are to be believed, there should be progress, as the pledges from developed countries are much higher than previously offered, while demands of vulnerable countries, both individually and through various negotiating blocks that have formed over the past 30 years, are more aggressive.

“Vulnerable countries, after compromising in Paris by not using the words ‘compensation,’ and ‘liability’ under the Paris Agreement, are really showing their frustration,” said Yamide Dagnet, director of climate negotiations for the World Resources Institute (WRI), referencing a joint announcement by Gaston Browne, The Prime Minister of Antigua and Barbuda, and Kausea Natano, the Prime Minister of Tuvalu regarding an accord to sue developed countries for damages n behalf of Small Island States. The agreement establishes a Commission of Small Island States on Climate Change and International Law.

On the pledge front, the United States is expected to announce a major financing package today, while several countries have announced dramatic increases to the Adaptation Fund. Spain, for example, announced a contribution of $30 million in 2022 with further increases through to 2025.

At the same time, more than 100 leaders, accounting for more than 86 percent of the world’s forests, committed to cooperating on halting and reversing forest loss and land degradation by 2030 – a commitment we will be examining in more detail over the course of the week.

More than 70 leaders also endorsed the Global Methane Pledge, committing to slash methane emissions by 30 percent within the decade – a significant move because methane captures more than 80-times as much heat as carbon dioxide does in the short term.

Developing Countries Step Up

In addition to demanding more accountability from developed countries, developing countries are pledging to reduce their own emissions dramatically – pledges that could have an iterative effect of pressurizing developed countries to produce more finance. India, for example, commitment to achieving net-zero emissions by 2070, along with reaching 50 percent renewable energy by 2030. Although the target date is 20 years beyond the date the world should achieve net-zero, it is a significant – and detailed – pledge from a developing country.

“Net-zero only became a topic of public discourse six months ago, this is something very new for Indians,” said Ulka Kelkar, who heads WRI’s climate program in India. “Just having this concept understood in India is going to give a very strong signal to all sectors of industry and society.”

Further Reading

For a detailed (but often technical) summary of ongoing negotiations, we recommend the International Institute for Sustainable Development’s daily updates. Today’s update is available here.

Carbon Markets at COP26: Here’s What to Watch for


Stephen Donofrio

Genevieve Bennett: Hi Stephen! COP26 starts this weekend. How are you preparing right now? 

Stephen Donofrio: It’s been busy! After announcing last month that the voluntary carbon markets are on track to hit $1 billion for the first time in a calendar year in 2021, the Ecosystem Marketplace team has been greatly encouraged with incredible interest in our data and insights. This is both from our returning stakeholders, as much as from those who are new to carbon markets. 

I’ll be at COP for the full two weeks, presenting data and market developments on a number of panels (listed here – and for any readers of this blog who will also be in Glasgow, let’s find a time to meet!). In general, there seems to be conclusive awareness that in order to achieve the infamous 1.5 degree C Paris Agreement goal, companies and governments to invest in all types of carbon credit projects. And all the while, climate change has become impossible to ignore with as its influence on our natural world are becoming all too regular and familiar. It’s now at a point of “climate action or bust.” 

In response to this, we’ve officially activated our daily-capable on-demand online trade reporting for carbon credit sellers to update their Ecosystem Marketplace Global Carbon Survey profiles as trades occur. We have also pushed up our release date of two new versions of the EM Data Intelligence & Analytics Dashboard.  

We’re really excited to be able to offer our EM Respondents first access to the more advanced data filters and tools to create customized views of trades prices and volumes, as well as meta-registry issuances and retirements. Additionally, we have updated the public version of our data dashboard, fulfilling our mission of offering the public data, insights, and information. 

Article 6, which governs carbon trading, is the one of the last pieces of the Paris rulebook where an agreement still needs to be hammered out. What do we need to know about those negotiations?

Genevieve Bennett

In 2019 in Madrid, negotiations got a long way toward designing a pretty solid and transparent system under Article 6. But they didn’t finish, and honestly we’ve saved a lot of the hard stuff for COP26.  

The issues left to negotiate are pretty technical, but the gist of it is we need to decide, one, how to handle accounting around internationally traded emissions reductions to avoid countries and private actors “double counting” the same reductions, and secondly the question of how to wind down the CDM.  

These issues, by the way, come into play only with a centralized system for emissions trading, i.e., a global carbon market. There is a much clearer path forward for bilateral cooperation between countries, or regional carbon clubs.  

There is so much going on at these negotiations. We’re hearing how countries aren’t being ambitious enough, finance is inadequate, this country or that country is going to torpedo the whole thing. How big a deal is Article 6? 

Two thirds of countries have said they definitely are going to use Article 6 to meet their NDCs. So it’s important. The upside is I think that means there’s a sense of urgency among a majority of people at the negotiation table to get this done. 

With a working Article 6, you create incentives for countries to go beyond their NDCs because they can sell that extra mitigation to other countries. That opens up an express lane for climate solutions.  

Carbon market mechanisms help you seek out lower cost solutions. There’s economic analysis showing that with the cost savings you can get from markets, if you reinvested those into climate mitigation, you could double climate ambition at no extra cost.  

Second, you create a demand signal that will pull in more private investment into mitigation projects, with huge potential implications for sustainable development. This is a huge opportunity to drive a wave of green finance to countries and places that really need it.  

Let me put you on the spot. Are we going to see an Article 6 agreement in Glasgow? 

These are tough negotiations, but again there’s a sense of urgency this year. But also there’s a sense that it needs to be the right agreement or you create all these loopholes that undermine the whole Paris effort. So there’s potentially a tension there between getting it done and getting it right.   

A lot of people watching this would agree that no agreement would be better than a weak agreement. Especially since you can accomplish quite a lot outside of the UN framework in the meantime even while Article 6 remains unresolved. 

Yes, it doesn’t seem like the private sector is waiting on the UNFCCC. That’s been a really interesting dynamic in the last couple of years. For me, honestly a little unexpected too – that despite these delays, despite the global pandemic, that so many companies and cities and universities have grabbed the baton and kept moving forward on their own plans for action.  

Absolutely – in the purely voluntary carbon markets we are seeing an incredible surge in demand.  

Companies have set ambitious net zero targets, and a lot of them are using carbon credits to tackle that last five percent or so of emissions that are really tricky to address. Things like emissions from business travel, or coming from elsewhere in your supply chain that you don’t have direct control over. 

We projected in September that this would be a billion-dollar year for voluntary markets for the first time ever. Demand is higher than we’ve ever seen in the sixteen years we’ve been tracking markets. And that’s starting to move prices upward.  

Personally, I think that’s a very good thing. We’re seeing emitters willing to pay more for emissions reductions, and especially for credits that come from projects with all of these other benefits for sustainable development, whether that is protecting forests in the Amazon, or getting clean cookstoves to families in Africa – which especially is good for women – or sustainable agriculture, or so on.  

Carbon markets are becoming a bigger and bigger driver of finance for sustainable development. I think that sometimes gets missed in all of this focus on the technical aspects of COP negotiations or the market opportunities that everyone’s excited about in London and New York.  

Shades of REDD+
Managing expectations for Glasgow: Art. 6 of the Paris Agreement and the Voluntary Carbon Market

28 October 2021. In November 2021, the world’s attention will zoom in on Glasgow. Expectations are great for the 26th session of the Conference of the Parties to the UN climate change convention (COP-26) to deliver the implementation modalities for the carbon market mechanisms defined under the Paris Agreement. Many have high hopes that finalizing the implementation arrangements for the ‘carbon market’ Article 6 will open the financial floodgates for unrestricted carbon finance to flow into mitigation projects and programs, which is urgently needed, particularly in developing countries. While this is unlikely to happen, Glasgow may still send important signals to international carbon markets.

Carbon finance is certainly needed….

Climate finance must be urgently scaled – more money is needed, and pledged amounts need to be effectively and efficiently deployed. Carbon finance offers a financing modality that channels foreign direct investment into developing countries. Private sector driven carbon markets cannot replace public policy, but they can help to realize mitigation potentials in sectors, industries or regions where the reach of public policy is weak — due to a lack of political agreement, limited public finances, or difficulties reaching remote areas.

This is particularly relevant in the land sector which offers few bankable investment opportunities and is generally stripped of cash. A newly published paper finds that three quarters of cost-effective land-based mitigation potentials can be found in developing countries (10.7 GtCO2e annually). This makes about a third of the mitigation potential needed to achieve the 1.5 C Paris temperature goal. Activities such as reduced deforestation, restoration of forest ecosystems, carbon-rich agriculture, promotion of healthy diets yield high environmental, development and health benefits and can be implemented without further delays. However, so far only very small share of climate finance goes into the sector.

Carbon markets can help to fill this enormous financing gap. Sure, they are not without problems. They come with the risk of inflated emission reduction claims for the sake of profits; they draw finance only to a portion of available mitigation opportunities; and without safeguards tend to cement existing power structures. However, if backed by safeguards and robust accounting systems, they can deploy finance quickly and channel it into sectors in developing countries that offer mitigation opportunities while yielding additional sustainable development benefits. It is therefore understandable that many actual and potential market participants hope that an agreement on the implementation rules of Article 6 of the Paris Agreement may reduce implementation barriers and liberate this mitigation potential.

…but a UNFCCC-regulated carbon market may turn out to be a mirage

The question is whether the completion of the Article 6 negotiations will indeed mobilize new demand for carbon credits and opportunities for scaled carbon finance. This is certainly the preferred outcome. However, the agreement on the rules for carbon trading in Glasgow may also turn out to be another step towards a mirage of an internationally regulated and liquid carbon market — a mirage that won’t die, regardless how often it has gone up in scintillating air.

With few exceptions, developed countries have made it clear in their nationally determined contributions (NDCs) that their targets are to be met through domestic mitigation measures. A few countries, such as Switzerland and Sweden, have invested in Art. 6 pilots, but no country – with the exception of Japan – runs a substantive and large carbon credit purchase program. Instead, the development of new pilots has slowed down since 2019, as pressure on developed countries is increasing to refrain from acquiring carbon offsets. Twenty years have passed since the start of the Clean Development Mechanism (CDM, agreed in Marrakech at COP-7), and while acceptable back then, public opinion has since withdrawn permission for developed countries to use offsets to meet their climate targets. Even if donors decided to engage with Article 6, it would most likely be through public trust funds, where funds notoriously sit parked for a long-time before being deployed. It is therefore rather unlikely that public finance will flock towards Article 6 mitigation upon return from Glasgow.

Companies also remain tepid with respect to a UNFCCC-regulated carbon market. Until now, companies have been largely absent from efforts to develop projects under emerging Article 6 modalities. This is unlikely to change. Subjecting their efforts to the rules of Article 6.4 Paris Agreement—the article that foresees non-government engagement—does not seem an attractive proposition to corporate buyers.

There is no ‘compliance push’ driving corporate buyers to Article 6 approved “internationally transferred mitigation outcomes,” which, so far, are not recognized compliance instruments under domestic carbon pricing schemes. Whatever the results of Glasgow will be, regulation of carbon trading under Article 6.4 of the Paris Agreement will depend to a significant extent on host country regulation, oversight, and institutions, such as registries, and public offices ensuring proper accounting and issuing approvals. To be able to issue and track tradable units and to make ‘corresponding adjustments,’ countries will have to have built sophisticated institutions and capacities. This is unlike the CDM, which benefitted from tight international regulation and integration into the cap-and-trade infrastructure of the Kyoto Protocol. The CDM also generated credits that had compliance value under the EU Emissions Trading Scheme. From the perspective of private investors and project developers, engagement with Article 6 amounts to a looming nightmare of bureaucracy, which is unlikely to be worth engaging  with to meet voluntary corporate commitments.

By contrast, the private sector is ready to invest and has shown a boom of interest in carbon market activities. While investments in decarbonizing their own operations and supply chains must take priority, companies have shown strong interest in investing in voluntary carbon markets—including in developing countries—as part of broader climate engagement strategies. For many companies, the voluntary carbon market is tested, and methodologies known and available.

However, agreement on Article 6 implementation rules is still relevant.

Article 6 may not result in large new investments. However, for a number of reasons the finalization of the ‘market’ rules of the Paris Agreement is still relevant:

  1. The insecurity around Article 6, paired with a lot of confusion around its relation to the voluntary carbon market, holds back investments. Clarifying what Article 6 is, can, and will be, and what it is not, cannot, and will not be, is essential. For example, it is important to confirm that the UNFCCC has no jurisdiction over voluntary carbon market transactions governed by private standards. Some clarification on which market functions, in particular in the case of Article 6.4, will be fulfilled at the level of the UNFCCC, and what remains to be decided at the country level, can also help to unlock mitigation finance, in particular for developing countries.
  2. While diversity is good, obscurity is bad. Clear and transparent accounting is essential for any functioning market. COP-26 can help to foster a common understanding of when and how activities that generate carbon credits under Article 6 and the voluntary carbon market contribute to host countries’ NDCs under the Paris Agreement. The Glasgow meeting can provide guidance on how countries may account for voluntary activities that contribute to domestic mitigation, with and without ‘corresponding adjustments.’
  3. Governments may also consider developing broader mitigation and development programs under the more loosely regulated Article 6.2 of the Paris Agreement. Such programs can consider sectoral or jurisdictional programs that combine government and private engagement in carbon markets. Voluntary carbon standards can guide private project development and crediting, while multilateral and bilateral development partners can support policies that lead to sectoral transformation through grants, loans or results-based payments. Emerging jurisdictional REDD+ programs with their investments in readiness activities, diversity of finance streams, and rules on ‘nesting’ projects hold important lessons learned in that respect.

A completed Paris Rulebook provides an important element of the regulatory puzzle. Government engagement in carbon markets has obvious benefits: it reduces investment risks and ensures alignment of investments with policies. By contrast, voluntary carbon markets have the benefit of being flexible and independent of government regulation, bureaucracy, and they are less exposed to government challenges such as corruption.

Article 6 may motivate governments to engage more strategically with carbon markets. This includes a decision on how carbon markets can drive mitigation, and complement public efforts to reduce greenhouse gas emissions and enhance removals. Clarity on Article 6 can provide clarity on carbon accounting and empower countries to clarify where and when they support carbon market transactions, including those related to the voluntary carbon market. In the best case, Glasgow can ‘settle the case’ of Article 6 rules, and provide confidence to investors that it is worthwhile to invest in nature.


Shades of REDD+
Filling an Urgent Need: New Guidance for ‘Nested REDD+’ Published

19 October 2021 | The successful implementation of efforts to reduce deforestation and forest degradation (REDD+) depends on a close collaboration of governments, communities, and private entities. Governments have to take the lead in improving legal frameworks and investing in forest governance. Low levels of law enforcement, weak and contested land titles and rampant corruption undermines public goals to reduce and halt deforestation. At the same time, corporations must achieve transparency in their operations and eliminate deforestation from their supply chains. In addition, private investments into projects and programs that reduce forest loss can help to conserve forests at deforestation hotspots. They mobilize emission reductions and removals in a bottom-up, non-state approach to REDD+ that allows the forging of local multi-stakeholder coalitions around conservation.

In a rather unfortunate way, the interests of governments and the private sector around REDD+ have been described as diverging – governments with an interest in monopolizing forest protection despite serious governance challenges and private investors driven to conservation by short-term financial interests. This juxtaposition of interests found its expression in a fierce debate on whether private investments in projects have a role to play in the context of REDD+, backed by mutual suspicion that private or public actors seek to undermine REDD+ accounting frameworks to maximize payments. It is time to bury the hatchet and champion all actors with an interest in protecting the forest.

‘Nested’ REDD+ can help to bring this short-sighted debate to an end and focus the collective attention on halting deforestation.

Nesting is a tool to implement forest conservation strategies, harnessing the financial muscle and implementation capacities of private not-for-profit and for-profit actors while aligning such activities with public policies around REDD+. Well-designed nesting systems align public policies and accounting frameworks with private projects that seek to avoid deforestation. Nesting recognizes the existence of project investments and acknowledges their contribution to realizing the mitigation potential of forests. However, it also appreciates the need for coordinated systems that ensure that REDD+ emission reductions are aligned with policy and conservatively measured. Considering budgetary constraints, policymakers may consider foreign-direct investments in avoided-deforestation or forest restoration projects as one – among several – valid REDD+ financing strategies. A nested system can actively encourage the development of future REDD+ projects and embrace them as a valid, private sector driven mitigation strategy.

However, so far, no fully developed nested system exists. For a reason: developing policy and institutional frameworks for nested REDD+ is no easy feat. It requires taking strategic decisions, while building technical capacities, assessing carbon rights and legal challenges, strengthening institutions, and managing performance risks. A recently released World Bank publication is offering help to policymakers: the “Nesting of REDD+ Initiatives: Manual for Policy Makers” discusses the operational details that need to be considered when implementing a nested REDD+ system.

Over the last 18 months, the authors had the opportunity to support the World Bank on developing practical guidance on how to implement nested REDD+ systems that take into account the different realities of REDD+ countries. Nested REDD+ systems can come in different shapes and forms and can be tailored to different country contexts. They differ in the degree of decentralization of REDD+ implementation and the role that they assign to nonstate actors (private entities, communities, and nongovernmental entities) in conserving and restoring forests. Decentralized REDD+ systems focus on allowing direct investments into projects while harmonizing and integrating accounting methods as well as defining common criteria for safeguards and stakeholder participation. Centralized REDD+ systems seek to achieve REDD+ outcomes primarily through public policies and allowing governments to (exclusively) receive and allocate REDD+ payments through benefit-sharing systems.

After multiple rounds of consultations with government officials, private sector entities, and practitioners working to reduce forest loss in tropical countries, the Nesting Manual presents four general models for REDD+ implementation:

A jurisdictional REDD+ program with no crediting of greenhouse gas (GHG) results at the sub-jurisdictional level. This model relies on the government’s ability to achieve emission reductions via public programs, and to monetize those emission reductions at the jurisdictional level. Local actors contribute by implementing activities defined by the REDD+ program and receive carbon benefits from the government as part of a benefit sharing arrangement.

A REDD+ program with jurisdictional and project-level GHG accounting and government distribution of funds to projects. Under this “centralized nested” model, the government encourages programs and projects and allows for the sharing of emission reductions or equivalent monetary benefits with programs or projects. REDD+ benefits are shared based on GHG performance. However, the rewards for projects depend on jurisdictional performance and government distribution of benefits.

A REDD+ program with jurisdictional and project-level GHG accounting and independent project financing. Under this “decentralized nested” model government allows the crediting and monetization of emission reductions at both the jurisdictional program and project scales. Projects can issue tradable carbon credits that do not depend on jurisdictional performance. In this model, the government can regulate the MRV and safeguards of the projects to ensure that they are in alignment with the national approach. 

Finally, governments can define criteria for project crediting without engaging in jurisdictional REDD+. This model does not foresee crediting of emission reductions at the jurisdictional level. Where countries are unable, or do not wish, to develop jurisdictional REDD+ crediting programs, they may still welcome investments in avoided-deforestation projects. In this case, the government may regulate projects, for example, to enhance the environmental integrity of claimed mitigation outcomes from projects, to provide guidance on benefit sharing by projects to ensure vulnerable populations are well served, or to ensure compliance with national safeguards.

The Nesting Manual elaborates on these four models, discussing design elements and ways to operationalize them. It thus enables governments to design nesting systems that are suitable to national circumstances, while ensuring the environmental integrity of mitigation outcomes from forests. A Decision Support Tool accompanies the manual, offering policymakers assistance in building a nested system. The Nesting Manual and Decision Support Tool represent a first attempt at a comprehensive analysis of the different elements that influence the design and implementation of REDD+ nesting. As time goes on, it is expected that the Manual and Decision Support Tool will be enriched with REDD+ nesting experience from different countries.

Nesting is pragmatic and action oriented. It rejects narrowly defined REDD+ implementation approaches and embraces instead a more integrated and holistic view of landscape conservation strategies. The Manual marks a step towards a scaled and multi-layered REDD+ implementation, which will help to conserve tropical forests. It is urgently needed.

Additional links in reference to excerpt that references investments “an aggregate of more than two billion dollars”:

Opinion: A New Wave of Global Resolve to Protect Tropical Forests around the World

28 September 2021 | Protecting and restoring tropical forests is one of the most powerful tools to slow and ultimately halt climate change. They store up to a quarter of all the above ground carbon and represent 50 percent of the world’s terrestrial biodiversity. Unfortunately, the world is losing forests at an alarming rate.

The international community has long recognized that action to protect forests is a central part of action to combat climate change. In fact, more than a decade ago, the international negotiations were kicking off on the rules for how countries should work together to reduce emissions from deforestation, promote conservation and sustainable management of forests, and enhance forest carbon stocks in tropical forest countries – actions collectively known as REDD+.

The results of these negotiations were enshrined in the Paris Agreement, where under Article 5, industrialized countries are encouraged to make results-based payments to developing countries for emissions reductions achieved at the jurisdictional level.

But, that was just the first step. To date, donor governments together with multilateral institutions, such as the World Bank and the UN Green Climate Fund, have committed more than $7 billion under the REDD+ framework. But much more finance is needed if the world is to meet its globally-agreed targets for climate, biodiversity, and land degradation, estimated to be $4.1 trillion financing gap for nature by 2050. Even funding support amounting to hundreds of millions of dollars is not always sufficient to give forest countries the confidence to embark on ambitious forest protection and emission reduction programs, which require significant investment of financial and political capital.

Simply put, the vast potential for climate action from REDD+ will not materialize in the absence of massively increased levels of visible demand. On the other hand, many potential providers of results-based finance are unwilling to make large-scale funding commitments in the absence of visible supply. In the REDD+ community, we called this the “chicken or egg” problem.

As someone who has been working in impact investing and climate finance while the REDD+ negotiations were unfolding, it was clear that forests needed a new business plan, and that a new strategy had to be adopted to solve this chicken-egg challenge. Ultimately, this mission led to the formation of Emergent in 2019. Our goal was to create a non-profit intermediary that could engage between tropical forest countries and the private sector to mobilize finance to support emissions reductions in deforestation. In its most distilled form, the theory of change was simple: if we can rally a big enough demand signal, the supply of large-scale forest protection solutions would materialize.

The LEAF Coalition Receives Overwhelming Response to Its Call for Proposals

It was this same vision that drove the launch of the LEAF Coalition earlier in the year. Coordinated by Emergent, LEAF is on track to become the largest ever public-private initiative designed to accelerate climate action by providing large-scale results-based finance to countries committed to protecting their tropical forests. Backed by the integrity of ART’s leading TREES standard, the aim is to unlock ambition in tropical forest countries to halt deforestation by sending an unprecedented demand signal. The Coalition is growing and just last week Delta Air Lines and PwC became the latest private sector participants to join. 

When we launched the initiative, we didn’t know exactly what response to expect from the Coalition’s call for proposals (CFP). Based on previous work and outreach, we knew there would be significant interest from tropical forest countries, but we couldn’t have put a specific number on it.

Well, if there was ever any question if the interest (and supply) is out there, the response to LEAF’s CFP answered it, and answered it definitively.

LEAF received more than 30 proposals from jurisdictions that together encompass over half a billion hectares of forest. Proposals were received from jurisdictions on four continents representing the world’s three great tropical forest regions: the Amazon basin, the Congo basin and the forests of South-East Asia. Jurisdictions’ estimated self-reported volumes totaling more than 1 billion tonnes of Emissions Reductions over a five-year period.

For those of us who have worked in this space for a long time, there was a definite feeling that an important milestone in the REDD+ journey was reached with this response; a significant step forward toward the goal of the Green Gigaton Challenge. It showed the tremendous resolve and political willingness from forest countries to protect their forests. Now it is time for the demand to respond and to step up at even greater scales.

In the period ahead, Emergent will be working closely with participants of the LEAF Coalition to carefully review the proposals to identify those able to meet Call for Proposals’ rigorous selection criteria and ambitious timelines. Discussions with jurisdictions are taking place over the next few months, with the aim of announcing the first set of agreements by the end of this year. 

But LEAF’s $1 billion target is just a start. These proposals have unlocked an enormous opportunity for the world to come together and support an end to tropical deforestation. Emergent’s mission and ambition is to mobilize enough finance to unlock all of the potential represented by these proposals and beyond. We have entered a new phase in the global REDD+ effort, and I for one am excited for what’s next.

Voluntary Carbon Markets Rocket in 2021, On Track to Break $1B for First Time
Press Release

Washington DC (15 September 2021) 

In the first eight months of 2021, voluntary carbon markets have already posted a near-60% increase in value from last year, driven by corporate net-zero ambition and growing interest in carbon markets to achieve Paris climate goals, a new report finds.

“We’re seeing record market volume and value in 2021,” said Stephen Donofrio, a lead report author and Director of Ecosystem Marketplace. “The markets are on track to hit $1 billion in transactions this year if current levels of activity and growth continue. It’s not just companies who are buying carbon credits as a small piece of their corporate net-zero strategy. There’s an increase in speculators purchasing credits. The combined value of those deals is becoming a serious source of finance for green projects around the world.”

Data from the State of the Voluntary Carbon Markets 2021 shows that as of 31 August 2021, voluntary carbon markets had already posted $748.2M USD in sales for 239.3 million credits, each representing one ton of carbon dioxide equivalent, reflecting a 58% year-to-date jump in value (up from $472.9M), and growth in credit volume of 27% over 2020 performance (up from 188.2 million credits transacted). 2020 was already a banner year for voluntary carbon markets, continuing 2019’s strong growth trajectory despite the emergence of COVID-19, says Donofrio—making 2021’s performance all the more striking.

The most active buyers in the market are the energy, consumer goods, and finance and insurance sectors. All are sectors that face challenges in quickly cutting climate impacts both in direct as well as financed emissions, says Donofrio, since a large share of their emissions come from an infrastructure or technological base they can’t quickly upgrade, or from parts of their supply chain or portfolio they have less influence over than direct operations. Carbon offsets are being purchased by companies to immediately reduce their net emissions footprint as they work to abate these more costly and difficult-to-address emissions in the medium to longer term.

The world needs to cut climate pollution in half from current levels by 2030, and bring them down to net zero by 2050, to meet the Paris Agreement’s 1.5°C target. To support such rapid decarbonization, voluntary action through the carbon markets will need to increase 15-fold by 2030 and 100-fold by 2050 from 2020 levels, according to the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), an initiative led by Mark Carney, UN special envoy for climate action and former Governor of the Bank of England. The TSVCM is currently forming an independent Governance Body tasked with ensuring carbon credit quality and standardization.

“Ecosystem Marketplace’s latest report provides insights into the swift growth of voluntary carbon markets and emphasizes the need to guide the markets to deliver the highest quality possible,” says Annette Nazareth, Operating Lead for the Taskforce on Scaling Voluntary Carbon Markets and former SEC commissioner and Senior Counsel at Davis Polk & Wardwell. “I’m delighted to see the significant market momentum of the past year, as ever more companies and individuals are taking action. The new Governance Body being established by the TSVCM will play a key role in ensuring the large volume of carbon credits traded are of high quality and integrity.”

Tightening supply lifts prices for many credit types

“Carbon credit projects and retailers are struggling to keep up with demand in a hot market,” says Patrick Maguire, a lead author of the report and Senior Manager of Ecosystem Marketplace.

A tightening supply has also driven up prices for many types of credits. The weighted average price per ton for credits from forestry and land-use projects that reduce emissions or remove carbon from the atmosphere has been on a steady upward path, rising from $4.33 per credit in 2019 to $4.73 per credit so far in 2021, with a spike to $5.60 per credit in 2020. Prices for waste disposal credits (from projects such as landfill methane capture or diversion of organic waste for composting/digestion) and clean-burning cookstoves have also jumped so far in 2021 from their 2020 levels, by 42% for waste disposal and 16% for clean cookstoves.

“Whether higher prices will entice new supply to enter the market quickly enough to meet rising demand is still an open question,” says Maguire. “Most carbon projects typically take years to develop.”

But higher prices are certainly good news for project developers. The vast majority of credit transactions are for projects based in Asia, Latin America, and Africa, report authors say.

“Voluntary carbon projects have played a tremendous role in financing innovative projects for communities on the frontlines of the climate crisis,” says Jennifer Morris, Chief Executive Officer of The Nature Conservancy. “While the increased demand is encouraging, we need to move further, faster – it is imperative that this upward trend in prices reported by Ecosystem Marketplace accelerates if the voluntary carbon market is to play its full role in supporting sustainable development around the world.”

Demand for credits from nature-based solutions continues to be particularly high, says Donofrio. Projects that reduce emissions by protecting or sustainably managing at-risk forests, grasslands, and other ecosystems saw the volume of demand more than double in 2021 from 2020’s already-record high levels. Transactions of REDD+ credits, which generate emissions reductions by harnessing carbon finance to protect tropical forests from human-caused destruction or degradation, exploded in 2021, growing 280% between 2020 and 2021 year-to-date.

“We simply can’t meet the Paris goals without nature-based solutions,” says Dan Lambe, President of the Arbor Day Foundation. “Voluntary carbon markets are an important tool to help the world move much faster to restore and protect nature. It’s certainly exciting to see the markets reaching this new level in Ecosystem Marketplace’s latest market update.”

Experts see renewable energy’s 2021 rally as a “last hurrah” in voluntary carbon markets for some regions

2021 may also mark the peak of renewable energy (RE) as a major share of the carbon markets, for projects originating in developed countries. RE volumes rose from 42.4 million credits in 2019 to 80.3 million credits in 2020 and remained steady at 80 million credits in 2021, making it the second-largest market category after Forestry and Land Use. Prices for RE credits tumbled from $1.42 per credit in 2019 to $0.87 per credit in 2020 before rising to $1.1 per credit as of September 2021.

“A surge in transactions coupled with falling prices is consistent with a shift in renewable energy credits coming from Asia, now that the financial additionality case is harder to make for RE in developed countries,” says Maguire.

All carbon projects need to demonstrate “additionality,” meaning that they could not exist without carbon finance, in order to sell credits. As renewable energy becomes increasingly competitive with other forms of energy, as it has in developed economies, it no longer needs carbon finance to survive. “RE projects may continue to meet additionality criteria in some places such as less developed countries,” Maguire says, “but particularly in developed countries we don’t expect to see significant new supply in the coming years.”

Net zero and carbon neutral ambition, global attention to climate talks, point to a strong final quarter

The report’s writers say that all signs point to continued market growth through in the final quarter of 2021. Global climate talks in November 2021 are also expected to be a key moment for new net-zero commitments to be announced.

“The challenge for voluntary carbon markets today is no longer finding credit buyers,” says Michael Jenkins, CEO of the nonprofit group Forest Trends, Ecosystem Marketplace’s parent organization. “Now, we all need to guide the markets to deliver the highest quality possible, with the greatest benefit possible for planet and communities. Market data and transparency help us ensure that level of integrity.”


Additional quotes

“By some estimates the voluntary carbon markets are starting to grow at speed and scale. With COP26 coming in less than two months, it is time to enhance the rules that can build higher levels of confidence, integrity and quality, while helping to unleash higher financial flows that can support stepped up climate action.”

– Professor Edgar Hertwich of the Norwegian University of Science and Technology and a lead author of the UN Intergovernmental Panel on Climate Change’s Fifth Assessment Report (AR5)



Media contact: Genevieve Bennett / + 1 202 298 3007 / 

Ecosystem Marketplace is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. As a web-based service, Ecosystem Marketplace publishes newsletters, breaking news, original feature articles, and annual reports about market-based approaches to valuing and financing ecosystem services. We believe that transparency is a hallmark of robust markets and that by providing accessible and trustworthy information on prices, regulation, science, and other market-relevant issues, we can contribute to market growth, catalyze new thinking, and spur the development of new markets and the policies and infrastructure needed to support them. Ecosystem Marketplace is financially supported by a diverse set of organizations including multilateral and bilateral government agencies, private foundations, and corporations involved in banking, investment, and various ecosystem services. 

However You Look at It, Our Future is Forests

  • Tropical forests are a key tool for near-term emissions reductions as part of a larger strategy to meet Paris climate targets.
  • A portfolio of market-based mechanisms including REDD+ and carbon markets can channel finance to cost-effective emissions reductions right away, and help ensure companies follow through on their long-term net-zero commitments.  
  • These mechanisms have matured over the past two decades – now it is time to scale them quickly, while maintaining the highest level of environmental and social integrity.  
  • REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

The world is not on track to meet the Paris target of stabilizing warming in the 21st century at 1.5°C or lower, and there is very little time to change our trajectory. The IPCC estimates that global CO2 emissions in 2030 must be 40-50% lower than they were in 2010 in order to avoid the worst effects of climate change. This is still possible. 

Carbon markets allow us to lower the cost of cutting greenhouse gas emissions. When buyers can use markets to seek out the most cost-effective offsets, their savings can – and should – be used to “buy” even greater emissions cuts. This mechanism enables countries and companies to increase ambition, moving the world as close as possible to the 1.5°C target. 

Carbon markets also allow hard-to-abate sectors to play their part in achieving net zero emissions quickly. Where emissions are directly controlled by the emitter (“Scope 1” emissions) or can be cut by sourcing electrical generation, heating, or steam (“Scope 2”), this should be done. But where emissions come from elsewhere in the value chain (“Scope 3,” including for example: upstream or downstream transportation, agricultural supply chains, waste disposal), offsets may be the best option for quick action. In some cases, cutting emissions requires substantial operational, technological, and/or financial transitions that will take many years. Offsetting projects often provide immediate or short-term carbon storage. Carbon markets therefore offer companies an opportunity to immediately become carbon neutral while also pursuing a longer-term net-zero goal.  

When it comes to nature-based solutions, avoided deforestation needs to be the priority.  

REDD+ credits, generated through efforts to reduce emissions from deforestation and forest degradation, allow us to drive finance to tropical forests and their stewards. Preventing tropical forest loss is critical not only for climate stability but also for maintaining global biodiversity values, sustainable development goals, and indigenous and traditional cultures. 

Protecting existing carbon sinks from damage or conversion delivers twice as much greenhouse gas mitigation as any other nature-based strategy, including reforestation. New research also indicates that there is an asymmetry in changes to atmospheric CO2 concentrations between emissions and removals. In other words, compensating for an emission requires a greater amount of CO2 removal than avoiding that emission in the first place.  

It is especially hard to imagine how companies in hard-to-abate sectors can meet their net-zero commitments without REDD+. Tropical forests remain one of the largest – and still mostly untapped – potential sources of offset supply, and probably the only one that could be ramped up quickly enough to meet offset demand in the next decade without driving a major spike in the price of carbon. Avoided tropical forest conversion holds the potential to provide at least three gigatons per year of cost-effective emission reductions – which would cover one-fifth of the gap we need to close by 2030 to keep warming under 2°C. 

The decline of tropical forests, our planet’s great carbon sinks, thus represents an enormous stumbling block to delivering on the Paris Agreement. The longer tropical deforestation goes on, the worse the problem gets. In Amazonia, for example, mature forests more than mitigated the fossil fuel emissions of every single national economy in the region, with the exception of Venezuela, between 1980 and 2010. For most nations (Bolivia, Colombia, Ecuador, French Guiana, Guyana, Peru, Suriname) the sink probably additionally mitigated all anthropogenic carbon emissions from Amazon deforestation and other land-use change. But today that sink is in decline. Deforestation pressures from forces including land grabbing, logging, cattle ranching, agribusiness, and fires are being aggravated by climate change. This combination of forces is flipping the Amazon to a net carbon source instead of a sink, although scientists say recovery is still possible. 

There is also a moral argument for focusing climate finance on REDD+. Tropical forests cover 10% of the earth’s land area, but hold two-thirds of global biodiversity, much of which western science has yet to measure or understand. These forests are the source of livelihoods for millions of people. Many of who – particularly indigenous peoples – have always defended forests, and thereby the world’s climate future, with no recognition and in the face of violence and extreme pressure. Climate justice demands that we acknowledge the debt we owe these communities, and recognize all the values of living forests, not only the ones that can be measured by our economic system.  

We must guarantee REDD+ integrity through transparency and inclusion. 

REDD+ cannot work without a meaningful commitment to – and accountability for – participation by indigenous peoples and local communities (IPLC), given their role as the main stewards of the world’s carbon sinks and biodiversity. This commitment must include supporting IPLC in securing land tenure and carbon rights, and guaranteeing Free, Prior, and Informed Consent (FPIC). It also means that climate finance mechanisms need to do more work to incorporate indigenous perspectives and economic development strategies (as laid out through Life Plans or other tools). 

Likewise, carbon markets on the whole cannot deliver on their promises without transparency and a strong commitment to integrity. Our Ecosystem Marketplace initiative was founded with this mission: as an objective, not-for-profit information platform providing the kind of trustworthy and timely information that carbon markets and other climate finance mechanisms need to function effectively. 

We see a role for multiple REDD+ mechanisms to attract different types of funding and fit different contexts. 

One issue that seems to be dividing this space is whether resources and attention should be focused on jurisdictional or project-based REDD+. Our position is that we need more of both 

Jurisdictional REDD+ can deliver the large-scale supply and demand signals that are needed. It can also guarantee higher floor prices for REDD+ credits at a large scale. Jurisdictional approaches are uniquely equipped to incentivize governments to address many underlying drivers of illegal deforestation: weak enforcement of environmental protections, perverse economic incentives, such as taxes and subsidies that drive conversion for agriculture, and so on. 

Meanwhile project-based approaches have a long history of innovation in the voluntary carbon markets, with knock-on benefits for the entire carbon finance sector. Scaling up demand for REDD+ via the voluntary carbon markets should be an additional source of finance on the road to achieving jurisdictional outcomes, especially if nesting can provide a bridge between the innovation and targeted finance that projects can deliver, and the scale needed from jurisdictional REDD+. 

Moreover, territorially based REDD+ projects developed in partnership with IPLC are often well positioned to deliver benefits directly to IPLC. These benefits are not necessarily small-scale in nature, either; project-based REDD+ can reach significant scale considering the large territories owned by IPLCs. In the Amazon alone indigenous peoples control over 210 million hectares 

Innovations are still needed both in jurisdictional and project-based nested REDD+ to channel finance to areas with high forest cover and historically low deforestation (HFCLD), given that many of those places are increasingly at risk. REDD+ mechanisms need to better engage and benefit IPLCs with a track record of successfully protecting their forests. One path forward is for HFCLD to be seriously considered as a category for jurisdictional and project-based REDD+, although we recognize this requires resolving a number of technical limitations, particularly around how to treat additionality. 

REDD+ can’t work in the absence of inclusive and just partnerships with indigenous peoples and local communities, the planet’s best guardians of forests. 

First and foremost, jurisdictional REDD+ programs must take seriously the history of mistrust and conflict between IPLC and governments, and lingering concerns about whether governments will be good partners to IPLC. The mission to protect tropical forests, including REDD+, depends very much on IPLC: One-third of tropical forest carbon stored aboveground in the Amazon Basin lies within indigenous territories. In MesoAmerica, that share rises to nearly one-half, 31.4% in the Democratic Republic of Congo, and 36% in Indonesia. Not taking the time to build reciprocal relationships would be a substantial missed opportunity for both IPLC and jurisdictional programs, and a blow to global efforts to protect tropical forests.  

What does good partnership look like? It depends on the community, but some general principles can be established. Jurisdictional systems must clearly define, respect, and directly compensate the carbon ownership rights of IPLCs through benefit sharing mechanisms that are co-designed with IPLCs, including strong safeguards and FPIC. Jurisdictional mechanisms’ funding and policies cannot criminalize IPLC by forced removal from their lands, and must recognize and respect (via safeguards) traditional knowledge and cultures of indigenous peoples. REDD+ performance metrics also need to be culturally appropriate and co-designed with IPLCs. In addition, jurisdictional systems must provide for independent grievance mechanisms for IPLCs and other stakeholders. 

There are other ways in which jurisdictional REDD+ can better encourage IPLC participation. For example, clarifying whether indigenous territories can themselves be jurisdictions under many existing standards. Jurisdictional systems can also find ways to decrease the complexity and cost of validation and verification standards so that more IPLC territories can participate, so long as these efforts are delivering high integrity emissions reductions and fulfilling the Cancun safeguards. Doing so would  reduce the high barrier to program entry and increase the area of forest eligible for credible offsets.  

Finally, although jurisdictional REDD+ is shifting toward performance-based payments, donor governments must keep investing in governance and readiness in IPLC. Significant support is still needed to increase the capacity of IPLCs to adequately respond to REDD+ opportunities. The cost of this capacity building cannot be expected to come solely from philanthropic cooperation, but rather be a central cost in architecture and design of jurisdictional programs. 

Project-based REDD+ should of course abide by similar principles of FPIC, recognition of IPLC carbon rights and cultures, appropriate compensation, and including IPLC in design and implementation of benefits-sharing when their projects involve IPLC territory.  

More to the point, if IPLC believe their best opportunities lie in designing, implementing, and benefitting from their own REDD+ projects nested within or independent of jurisdictional programs (with questions of carbon accounting being appropriately addressed), they have every right to do so.  

Looking forward, our team will remain active partners and participants in the REDD+ space – providing data, thought leadership, opportunities for consultation and coalition-building between diverse stakeholders, demonstration where appropriate, and sustained and creative advocacy with key decision-makers in climate finance. We welcome new collaborators in this work, always. REDD+ is too important a piece of the climate solution portfolio; we need to get it right. 

(This blog first appeared on Forest Trends’ blog: Viewpoints on 25 August 2021)

Mobilizing Large-scale Climate Solutions from the Forest Sector, Introducing TREES 2.0
EM Strategic Supporter Insights

24 August 2021 | The Architecture for REDD+ Transactions (ART) has released an expanded and enhanced version of The REDD+ Environmental Excellence Standard (TREES) for measuring, monitoring, verifying and crediting climate progress in the forest sector. The updated version – TREES 2.0 – broadens opportunities to unlock large-scale solutions from forests in support of efforts by the international community to achieve the ambitious goals in the Paris Agreement.

In the fight against climate change, the urgency of reducing deforestation, restoring and regrowing forests and protecting intact ecosystems in areas with low historic rates of deforestation is well understood. Scientists estimate that these natural climate solutions can provide one-third of needed climate action this decade.

The Paris Agreement paved the way for large-scale climate solutions from forests by endorsing international cooperation to protect and enhance forest carbon stocks and reduce emissions from deforestation and forest degradation, collectively known as REDD+. However, a major barrier to mobilizing large-scale finance has been the lack of a high-integrity, standardized approach for the measurement, monitoring, reporting, verification and crediting of emission reductions and carbon removals from forests at a jurisdictional scale, including the assurance of environmental and social safeguards.

ART was created to meet this challenge with the objective of attracting finance at scale to support ambitious climate action in the forest sector by countries and large sub-national jurisdictions (such as provinces or states) by ensuring that TREES emission reduction and removals credits are comparable across jurisdictions and fungible in carbon markets with credits from other sectors. The first version of TREES, released in 2020, focused on ensuring the integrity of credits for emission reductions from reduced deforestation and forest degradation – the most urgent priority for the forest sector.

TREES 2.0 includes innovations to broaden access to and activities covered by forest carbon crediting, while maintaining rigorous safeguards. TREES 2.0 expands options for participating jurisdictions to access carbon market financing by including crediting for additional mitigation actions from the forest sector notably (i) protecting forests in jurisdictions with high forest cover and low rates of deforestation and (ii) enhancing carbon ‘removals’ due to reforestation and forest restoration efforts. It also creates a pathway to recognize the contributions of Indigenous Peoples to protecting forests and reducing associated emissions.


  • TREES 2.0 expands jurisdictional-scale crediting for forest restoration and the establishment of new forests – which remove carbon from the atmosphere – adding another critical solution to help drive transformational change in the forest sector and achieve the goals of the Paris Agreement.
  • TREES 2.0 adds an innovative crediting approach for jurisdictions that have historically protected their forests. These are areas that have high forest cover and low levels of deforestation (also known as High- Forest, Low Deforestation (HFLD) jurisdictions). Incentivizing jurisdictions to keep their forests standing creates a more effective and equitable global system for forest protection and restoration.
  • TREES 2.0 creates a new opportunity for Indigenous Peoples – who provide a critical global service as effective forest protectors – to contribute and benefit. Indigenous Peoples territories are eligible to aggregate as subnational accounting areas as part of a national submission to ART to meet the required scale threshold. In addition, these subnational Indigenous Peoples territories are eligible to qualify as HFLD and therefore elect to use the TREES 2.0’s HFLD crediting approach to better reflect their historical performance in protecting their forests.

ART has also clarified requirements to avoid double counting and improved requirements around uncertainty, while also enhancing clarity for how project-level activities can fit within a jurisdictional approach, as well as how TREES operationalizes the social and environmental safeguards defined by the United Nations Framework Convention for Climate Change (UNFCCC) for the implementation of REDD+ activities – known commonly as the Cancun Safeguards.


  • TREES 2.0 clarifies provisions to avoid double counting under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the Paris Agreement’s Article 6.2 (which provides an accounting framework for international cooperation to achieve national climate goals). It also clarifies situations in which credits issued for use in domestic compliance markets may not be considered double issued with TREES credits.
  • ART has also clarified that while ART does not directly credit projects or similar smaller-scale activities, ART recognizes that Participants will work with the private sector, Indigenous Peoples and local communities (IPLCs) and other stakeholders to design and implement successful REDD+ programs. To complement TREES 2.0, ART recently published a paper detailing Options for Nesting Under ART.

Despite universal agreement on the essential role of forests in achieving the goals of the Paris Agreement and reversing the worst effects of global warming, they are being lost at alarming rates. We urgently need to mobilize capital at scale for protecting and restoring tropical forests. By expanding access to carbon market finance, our goal with TREES 2.0 is to unlock such large-scale action from the forest sector.

A Bright Spot in the IPCC’s Dire Climate Warning

Photo: ‘Changing’ by the artist Alisa Singer “As we witness our planet transforming around us we watch, listen, measure … respond.”

11 August 2021 | The Intergovernmental Panel on Climate Change (IPCC) had a simple message for the world this week: “Climate change is widespread, rapid, and intensifying,” is how it unveiled the first installment of its 6th major assessment report.

Specifically, we’ve pushed carbon dioxide to levels not seen in 2 million years, and we’ve driven temperatures to levels not seen in more than 125,000 years – and, yes, it’s clearly we who are doing it and not sunspots or other natural phenomena. The science is “unequivocal” – another term the IPCC used for the first time.

Beyond the doom and gloom, however, there’s a bright spot: temperatures will stabilize somewhere between 1.5 and 2 degrees Celsius over pre-industrial levels if we get to net zero emissions within the next few decades, and they can fall back if we scale up both natural and technological systems for removing greenhouse gases from the atmosphere – from carbon sequestering trees to industrial carbon capture and storage (CCS) technology.

It might be too late to prevent the seas from rising, but it’s not too late to save civilization.

If we do nothing, however, the planet’s living ecosystems will lose their ability to mop up greenhouse gasses, and our agricultural economy could collapse.

None of these findings are new, and they’re even a reason groups like the Net Zero Asset Managers initiative are pushing corporate pledges to achieve “net zero” emissions by 2050. At net zero, companies have decarbonized to the extent possible and are offsetting residual emissions through removal mechanisms like tree planting and CCS.

The danger, of course, is that companies will fixate on 2050 with the aim of starting to reduce in 2040 instead of now. That’s why those pushing for pledges are also calling for interim reduction targets.

These groups, however, are also giving short shrift to the concept of “carbon neutrality”, which is a critical tool for accelerating reductions to net zero.

Carbon neutral is where companies can be now, while they’re still in the process of decarbonizing on their way to net zero.

While net zero means eliminating fossil fuels and then only using offsets that remove greenhouse gases from the atmosphere, carbon neutral means companies are offsetting while they transition to new technologies, but they’re not limited in the types of offsets they can use. Instead of only using offsets that remove greenhouse gasses from the atmosphere, they can also use those that reduce emissions elsewhere – by, say, protecting endangered forests or funding low-emission technologies.

The two approaches are, in other words, not mutually exclusive and can run in parallel. Ideally, a company that is on a net zero aligned pathway to reduce its own emissions to the extent possible by mid-century will purchase offsets along the way to be carbon neutral in the near term.

This is critical, because it’s easier and cheaper to prevent these gasses from getting into the atmosphere now than it is to suck them out later. Natural climate solutions are still key, because human management of forests, farms and fields generates nearly a quarter of all man-made greenhouse gas emissions.

Those who ignore – or, in some cases, actively oppose – the use of carbon credits to become carbon neutral in the near-term often do so because they feel it’s a distraction from the ultimate goal of achieving net zero emissions.

It’s not.

It’s a way of getting there sooner.

New partnership with UN aviation agency to provide insights on carbon offsetting market
Press Release


05 August 2021 | As more than 100 countries sign on for the pilot phase of a new international carbon offsetting mechanism for the aviation industry, the International Civil Aviation Organization (ICAO) and the carbon offset trade reporting initiative Ecosystem Marketplace have entered into a new partnership aimed at facilitating the transparency of the transaction of carbon credits eligible for airline offsetting under ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

“Transparency has been fundamental to the design and implementation of CORSIA since its inception, and the ICAO Council welcomes this Ecosystem Marketplace agreement aimed at addressing its expectations for reliable data and analysis on the status and evolution of associated carbon markets,” highlighted ICAO Council President Mr. Salvatore Sciacchitano. “As things proceed we see CORSIA and other ICAO initiatives’ contributing to more and more voluntary commitments by aviation stakeholders to ambitious climate goals, including net zero targets.”

Through ICAO, States have agreed to an aspirational goal of carbon neutral growth from 2020. CORSIA contributes to the achievement of this, complementing a broader package of aviation CO2 reduction measures, such as technological innovations, operational improvements, and sustainable fuels. International aviation currently accounts for less than two percent of global CO2 emissions, but emissions from international air transport are expected to grow considerably in the coming decades. Climate impacts from aviation, with the exception of international air traffic, are addressed under States’ Paris Agreement commitments. To complement their Paris Agreement objectives, States have also committed to addressing emissions from international air traffic through agreements facilitated by ICAO, a UN agency.

CORSIA sets a baseline for emissions from international air traffic and requires airlines to offset emissions in excess of that baseline by purchasing high quality offsets that are subject to stringent eligibility criteria. It is part of a broader package of measures to achieve the ICAO global aspirational goals for international aviation.

“This encouraging new partnership with ICAO marks an important milestone for Ecosystem Marketplace and the aviation sector,”  said Stephen Donofrio, Director of Ecosystem Marketplace. “As CORSIA is a global scheme governed by a regulatory compliance model, the market data transparency resulting from this agreement will play an essential role in the sector’s pathway towards decarbonization, including complementary voluntary efforts.”

Ecosystem Marketplace (EM), an initiative of the nonprofit organization Forest Trends, acts as a market reporting and public information platform to ensure transparency and integrity, from supply to demand. EM’s new Global Carbon Hub, launched in early 2021 in response to growing demand for market data, expanded information services to include a dynamic, near-real time data dashboard and meta-registry.

Through the new partnership, EM will leverage its 16 years of experience reporting prices and volumes of carbon trades to offer new market data for offsets eligible for ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). ICAO will use this information to regularly inform States and the general public as part of the efforts of the Organization to enhance transparency and market confidence vis-à-vis CORSIA implementation. Beginning in Q3 2021, ICAO will integrate Ecosystem Marketplace data of CORSIA-eligible emissions units into its CORSIA public website and the monthly CORSIA newsletter shared with 193 Member States. Ecosystem Marketplace will also make the data available on its Global Carbon Hub Data Intelligence & Analytics Dashboard.

“ICAO and its Member States would benefit from information and analysis related to carbon market and CORSIA to be provided by Ecosystem Marketplace, a neutral third party nonprofit organization”, highlighted ICAO Director, Air Transport Bureau, Mohamed Rahma. 

“Forest Trends’ position has long been that carbon markets and other forms of climate finance need transparency and integrity if they are to deliver real results at the scale needed to meet Paris ambitions,” said Michael Jenkins, CEO and Founding President of Forest Trends. “I am delighted to embark on this  new partnership with ICAO.”


Ecosystem Marketplace ( is an initiative of the non-profit organization Forest Trends, and a leading global source of information on environmental finance, markets, and payments for ecosystem services. As a web-based service, Ecosystem Marketplace publishes newsletters, breaking news, original feature articles, and annual reports about market-based approaches to valuing and financing ecosystem services. We believe that transparency is a hallmark of robust markets and that by providing accessible and trustworthy information on prices, regulation, science, and other market-relevant issues, we can contribute to market growth, catalyze new thinking, and spur the development of new markets and the policies and infrastructure needed to support them. Ecosystem Marketplace is financially supported by a diverse set of organizations including multilateral and bilateral government agencies, private foundations, and corporations involved in banking, investment, and various ecosystem services. 

A specialized agency of the United Nations, ICAO was created by governments in 1944 to support their diplomacy on international air transport matters. Since that time, countries have adopted over 12,000 standards and practices through ICAO which help to align their national regulations relevant to aviation safety, security, efficiency, capacity and environmental protection, enabling a truly global network to be realized. ICAO forums also provide opportunities for advice and advocacy to be shared with government decision-makers by industry groups, civil society NGOs, and other officially-recognized air transport stakeholders.


Media contact: Genevieve Bennett, +1 202 298 3007,  

An Amazon Bioeconomy is a Path Forward for Brazil

Originally published on the Forest Trends Blog “Viewpoints” (June 30, 2021)

Attacks on indigenous territories by land grabbers have been increasing in recent weeks in Brazil. Land conflicts in general have reached a troubling milestone – 1,576 cases in 2020 – the most since the Pastoral Land Commission began recording in 1985 and 25% higher than the number of cases in 2019. Land invasions also broke records, more than doubling in 2020, with indigenous peoples representing 72% of recorded cases. This, combined with the resignation of Brazil’s Minister of Environment Ricardo Salles following allegations of illegal timber smuggling, further highlights how volatile and urgent things have become on the forest frontier of the Amazon.

The continued increase in deforestation and environmental destruction throughout the Brazilian Amazon is clear evidence that the path of development to date has been ill-conceived. However, both Federal and regional governments need to conciliate economic growth to benefit the millions of Brazilians who live in this vast region. The challenge and opportunity Brazil currently faces is to achieve this with private investments while promoting the overall conservation of the Amazon and supporting thousands of indigenous and other traditional forest communities.

Creating the right policies, markets, infrastructure, and innovative connections is urgently needed to set a new course for sustainable, inclusive, and environmentally sound development. The bioeconomy of the Amazon, or “Amazon 4.0” as it has been called by Carlos Nobre, member of the Brazilian Academy of Sciences, is a promising pathway for the Brazilian Amazon. The New York Times described this new pathway for the Amazon as harnessing the technologies of the fourth Industrial Revolution. As a prominent economic force and the world’s largest forest country, Brazil is strategically positioned to be a global leader in shaping and modeling a new way of doing business, a challenge and opportunity as countries slowly turn to post-pandemic recovery.

As deforestation rates continue to soar in the Amazon, regional governments are under pressure to control forest loss and deliver economic growth, both which currently rely primarily on forest conversion for agriculture and livestock production. This puts immense pressure on the forest frontier and the indigenous communities living on the other side. As the frontline against further forest loss, indigenous peoples are critical contributors to the conservation of intact forest landscapes, benefitting both biodiversity conservation and national climate commitments. Indigenous territories experienced 0.1% net carbon loss from 2003 to 2016 – the lowest rates of any protected area in the Amazon. One-third of the Amazon’s carbon stocks are located in indigenous territories.

Over two decades partnering with indigenous peoples has taught Forest Trends that long-term collaboration and supporting indigenous communities is the best way to stabilize the forest frontier – doing so both helps them defend their forests from illegal activities and strengthens sustainable forest economies of their choosing. There is a balance to be struck between land stewardship and its sustainable use, one that indigenous peoples around the world have practiced for generations.

Traditional Amazon systems have been based on diversity, not monoculture, taking advantage of a multitude of crops and wild-harvested foods, drawing carefully on different forest types and cultivated areas, and keeping the overall landscape intact. The “Amazon Bioeconomy” we are proposing mimics traditional Amazon management systems with potential to create a diversity of supply chains based on the incredible natural wealth of the region.

The current model relies on single-product economies, such as beef, soy, or palm oil. The consequences of failing to change this practice are dire and will only get worse, as highlighted in our recent report, Illicit Harvest, Complicit Goods, which showed that at least 69% of the tropical forests destroyed for agricultural commodities between 2013 and 2019 was done so illicitly, in violation of national laws and regulations. Now is the time to focus market and consumer attention towards products that sustain forests and the communities living there, rather than those that drive forest loss.  These are local strategies with global impact, creating direct, measurable benefits for forest communities, and a safer climate for us all.

Is ‘net zero’ much ado about nothing?

Originally published on GreenBiz (May 11, 2021)

13 May 2021 | It feels almost quaint to remember way back when “80 by 50” — an 80 percent reduction in greenhouse gas emissions by 2050 — was a bold goal for a company or government entity to make. It was seen by many as audacious, possibly unachievable, but still a necessary target.

The “way back when” in this case seems to be around 2014.

Ah, yes: The good old days.

Today, “80 by 50” would not pass muster. Net zero is the near-universal goal of nations, states, provinces, cities, companies, universities and others. And even that goal sometimes gets knocked as being too little, too late.

The five questions below represent just a sampling of issues surrounding what net zero means — and doesn’t. These questions and others will be central to our upcoming (and free) VERGE Net Zero conference in July.

First, what is net zero?

For those not yet up to speed, net zero refers to the goal of emitting no greenhouse gases by a specific date, typically 2050. However, Germany just committed to reaching this goal by 2045. Corporate signatories to the Climate Pledge have committed to net zero by 2040. IBM said it would reach that milestone in 2030. The bar continues to move. Such commitments often are coupled with an interim goal of cutting emissions in half by, say, 2030.

The overriding question whether net zero will be largely a check-the-box activity or a truly disruptive force. The answer is up for grabs.

Net zero can be achieved, first and foremost, by cutting or eliminating greenhouse gas emissions and, secondarily, by offsetting any remaining emissions through such actions as planting trees, investing in renewable energy projects that replace fossil-fuel energy, or investing in novel carbon-removal technologies such as direct air capture.

The concept of net zero goes back nearly a decade, in the run-up to the 2015 COP21 climate conference in Paris. According to one telling, a group of female climate leaders met at a Scottish estate in 2013 to discuss bold climate goals that could be enacted two years later in Paris. After a heated debate, they agreed that the goal should be to pursue net zero by midcentury. In the Paris Agreement that ultimately resulted, negotiators agreed “to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century.”

That is, to achieve net-zero emissions.

Is net zero the same as carbon neutral?

The terms are often used interchangeably, although there are subtle but critical differences. You can become carbon neutral simply by buying offsets — for a year’s worth of driving or air travel, for example. Net zero would require that you drive or fly as little as possible, offsetting only what’s unavoidable. The same principle holds for any other activity — for a company, building, factory, product, community or nation.

In some cases (as with ExxonMobil, for example), companies have committed to net-zero carbon intensity, a term that means that the amount of carbon per unit of measure does not increase, even as overall emissions may rise. Exxon has come under fire from activist investors for a stance that, critics say, disingenuously claims to be net zero but, in fact, will lead to an increase in overall emissions in the coming years.

Does net zero rely too much on offsets?

Companies are being increasingly criticized for investing more into offsets than into actual emissions reductions. That is, simply buying offsets in lieu of any emissions reductions is taboo. But, given that there is no universal standard about how much offsetting is the “right” amount, it’s an open field for organizations to claim pretty much whatever they want. But that could change. The Science Based Targets initiative is working on what it calls “the first global standard for net-zero business.”

Is net zero achievable with existing technologies?

Most experts believe we have the technologies, although some are not yet cost-competitive.

But many are. Cutting energy use — the first step in reducing emissions — relies on a sizable toolbelt of well-oiled energy-efficiency technologies with relatively fast returns on investment. The next steps are harder, however. Electrification — transforming cars, buildings, factories and other things to operate on electricity rather than, say, oil or natural gas — is a fast-emerging field. And affordable, enabling technologies — electric vehicles and grid battery storage, among them — are quickly coming to market.

Beyond that is carbon capture, a portfolio of technologies that remove greenhouse gases from the atmosphere and store them securely for decades or centuries, including in products such as concrete. And there are carbon-free fuels that show great promise, such as blue and green hydrogen, but that are still nascent and expensive.

Is net zero greenwash?

Some think so. Critics say that the overreliance on offsets and unproven technologies, combined with the roughly three-decade time horizon to achieve most net-zero goals, enable companies to continue business as usual for the foreseeable future while still maintaining a net-zero stance. As a result, as I noted a couple months back, net zero may be in for a backlash.

“Far from signifying climate ambition, the phrase ‘net zero’ is being used by a majority of polluting governments and corporations to evade responsibility, shift burdens, disguise climate inaction, and in some cases even to scale up fossil fuel extraction, burning and emissions,” stated the watchdog group Corporate Accountability, which published a report last fall on “How ‘net zero’ targets disguise climate inaction.”

“The term is used to greenwash business-as-usual or even business-more-than-usual,” it continued. “At the core of these pledges are small and distant targets that require no action for decades and promises of technologies that are unlikely ever to work at scale, and which are likely to cause huge harm if they come to pass.”

Activists, including investors, aren’t likely to accept any old net-zero commitment without holding it to intense scrutiny. For companies, that means the bar likely will rise over time.

The overriding question, at the end of all this, is how companies and others will lean into their net-zero commitments in the years ahead — whether they will be largely check-the-box activities or a truly disruptive force. Right now, the answer is up for grabs.

These are among the issues worth pondering, debating and embracing. Indeed, they’ll be front and center at our upcoming Net Zero event.

Nothing less than our lives and future rest on the answers.

Photo: GreenBiz photocollage, via Shutterstock

Chocolate Companies are Changing to Make Cocoa Ethical

The economic disruption to many sectors from the COVID-19 pandemic is a strong reminder that consumer markets can change drastically in response to social and environmental drivers. COVID-19 has caused major financial losses for some industries, while driving demand for products like hand sanitizertoilet paper, and chocolate. If you’ve been feeling a stronger-than-usual inclination to drown out stress in some sweet, chocolatey goodness this past year, you’re not alone. Chocolate sales rose by over 5% between March and August of last year, and sales of premium chocolate increased by almost 13% compared to sales in 2019, according to the National Confectioners Association.

Unfortunately, chocolate purchases have inherent consequences for their far-reaching global supply chains. At the source, poverty is endemic in cocoa farming communities, almost all of which are smallholders. These smallholders, while integral to chocolate production, receive only 7% of profit from end product chocolate sales (compared to the 44% and 35% received by manufacturers and retailers, respectively). The COVID-19 pandemic hasn’t helped matters as the global recession drives down cocoa prices. Poverty drives socially and environmentally harmful practices, such as deforestation and child labor in cocoa farming communities, which can have long-term negative impacts on financial performance and resiliency and for both cocoa farmers and corporate buyers.

What’s in your chocolate bar

Though cocoa originated in the rainforests of South America, today close to three-quarters of the world’s supply is grown in West Africa. Partially driven by cocoa production, many of the forests in West Africa have been cleared in the past 30 years, and what remains is a biodiversity hotspot (the Guinean Forests of West Africa), which is home to endemic and endangered species, like chimpanzees and forest elephants.

Poverty drives many farmers to employ their children (and occasionally trafficked child migrants from neighboring countries) on their cocoa farms, despite much of the work being dangerous and labor-intensive. Though child labor and deforestation may increase short-term income, these actions ultimately erode the resiliency and well-being of cocoa farming communities by damaging ecosystem services and future generations’ education prospects.

Companies that produce and sell cocoa products – especially public-facing consumer goods companies – have become wary of negative publicity linking their supply chains to deforestation and child labor. This publicity erodes public trust, has repercussions for the company’s purchasing relationships with vendors or clients and may create legal trouble. Several chocolate brands have already faced lawsuits over child labor in their cocoa supply chains.

Proliferation of promises with mixed follow-through  

A growing number of influential companies are taking steps to assess and mitigate the business risks posed by deforestation and human rights abuses in their cocoa supply chains. In a new report by Supply Change, Trends in the Implementation of Ethical Supply Chains, more than half of the 65 companies reviewed have made commitments to address deforestation or other sustainability issues in their cocoa supply chains. However, many companies have a way to go to implement these goals in ways that 1) cover all operational and souring locations, all suppliers, and all product lines, 2) are linked to ambitious time-bound targets to achieve zero gross deforestation, and 3) use appropriate cut-off dates for how recently cocoa produced on converted forestland is acceptable for the supply chain.

Eliminating deforestation in cocoa supply chains is particularly challenging the further down the supply chain you go. Cocoa farmers are typically separated from cocoa exporters and grinders by multiple intermediaries (e.g., cooperatives, small local traders, etc.). Traceability (tracking commodity volumes through different stages in the supply chain) and supply chain mapping (identifying all supply chain actors) are important components of cocoa policies, but identifying the individual farms and ensuring no deforestation or human rights abuses have taken place is still difficult for companies to achieve. Results from the new Supply Change report reflect this: just over half of companies (36) were aiming to achieve traceability to the farm level.

A menu of solutions

Credible certification systems with robust no-deforestation and human rights criteria are one way companies address this and ensure they are sourcing environmentally and socially responsible cocoa. Companies sourcing certified cocoa often require fewer resources to achieve farm-level traceability, monitoring, and supplier engagement goals. The largest certifier of cocoa, Rainforest Alliance/UTZ, certified over one million metric tons of cocoa in 2019. Their process includes regular evaluations and audits of the farmers they certify to ensure that they abide by environmental and social standards that align with sector-wide expectations for best practice.

However, many companies choose to trace cocoa supplies to the farm level and/or engage with suppliers on sustainability issues on their own, rather than relying on a certification standard alone. In fact, Supply Change found that 68% of companies (44/65) engaged with their suppliers and encouraged compliance with trainings and workshops or high-quality resources (e.g., cocoa trees, fertilizer, etc.). Although about one-third of companies had policies for responding to suppliers that were not compliant with their commitment, few disclosed detailed criteria for suspending, excluding, or reinstating suppliers, and few required time-bound resolution plans for suppliers to achieve compliance.

The Cocoa & Forests Initiative (CFI) is one collaboration that is driving action on cocoa-driven deforestation, especially through farm-level traceability and supplier engagement. CFI is a multi-stakeholder platform established by the World Cocoa Foundation and the IDH Sustainable Trade Initiative, which brings together the national governments of Côte d’Ivoire, Ghana, and recently Colombia; 35 companies (almost all of which are major cocoa buyers, including Mars – see below); and various environmental organizations to collaborate and implement complementary actions to eliminate cocoa-driven deforestation.

Civil society groups are working to provide tools that companies can use to develop and implement policies to address cocoa-driven deforestation beyond collaboration with CFI. For instance, the environmental advocacy organization Mighty Earth is supporting companies by addressing monitoring and traceability gaps through its interactive Cocoa Accountability Map of over 2,000 cocoa cooperatives in Côte d’Ivoire and proximate deforestation. A growing number of companies are using the Accountability Framework to identify and align their cocoa policies, commitments, and actions with the best practices recommended by leading civil society groups. In fact, Supply Change identified six companies – including top cocoa buyers like Cargill, Barry Callebaut, and Mars – that explicitly described using the Accountability Framework to align their definitions and approaches on supplier engagement, traceability, and measuring progress. It is suspected that more companies are doing the same without public disclosure.

Company Spotlight: Mars

Mars, one of the largest manufacturers of chocolate products in the world, sources around 400,000 metric tons of cocoa annually, or about 8% of the cocoa produced worldwide in 2020-2021. Mars is also one of the largest privately-owned companies in the United States and manufactures well-known chocolate brands like M&Ms, Snickers, and the eponymous Mars Bar.

The company has prioritized addressing deforestation and child labor in its cocoa supply chain in recognition of the fact that cocoa is integral and irreplaceable to its brand; Mars has a target to source 100% from deforestation-free cocoa by 2025, plus goals to improve cocoa farmer incomes, eliminate child labor, and reduce greenhouse gas emissions in its cocoa supply chain.

Nonetheless, Mars still has areas in which it could improve its cocoa policies. The 2021 Easter Chocolate Scorecard, which was produced by Green America, Mighty Earth, and Be Slavery Free, acknowledged Mars’ above progress but noted that they needed improvement in areas such as transparency and traceability, agroforestry, and livable incomes for farmers.

A key aspect of Mars’ strategy is supply chain mapping and tracing all cocoa volumes from the final product back to individual farms. In 2019, Mars released the names of all of its direct (“tier 1”) suppliers, and in 2020, the company released the names of all the farm groups (“tier 2”) in its supply chain. As of 2020, Mars was able to trace one-third of its cocoa to a farm boundary, allowing satellite monitoring and third-party auditors to detect forest loss and protected area encroachment.

Mars’s actions to address deforestation have been facilitated by the growing infrastructure of tools and initiatives. Mars is a signatory to the Cocoa & Forests Initiative, and is currently taking steps to achieve the targets laid out in its action plan. The development of their cocoa policy, including definitions and best practices, were also informed by the Accountability Framework.

What’s Next for Ethical Cocoa?

Though not as sudden or drastic as the changes inflicted by the COVID-19, environmental and social factors from cocoa production are shifting consumer markets for cocoa and chocolate products. The new report by Supply Change indicates that a number of influential companies have no-deforestation commitments for their cocoa supply chains, and are implementing strategies to trace their cocoa supply, engage with suppliers, and source certified-sustainable cocoa. However, company actions often fell short of full alignment with the best practices outlined in the Accountability Framework. For many companies, opportunities to improve their alignment with the Framework will involve more detailed reporting on approaches for assessing risk and resolving non-compliance issues with suppliers, time-bound targets for achieving no-deforestation, and establishing cut-off dates for forest conversion.

Alignment with the Accountability Framework, which recommends best practices for addressing commodity-driven deforestation in supply chains, is a useful benchmark for companies to know that they are approaching cocoa-driven deforestation effectively. As pressure grows from consumer preferences and due diligence requirements by import countries, companies that can demonstrate success in achieving ethical supply chains will have a competitive edge in consumer markets and incur fewer costs from issues such as regulatory fines and lawsuits.

Given the complexity and opacity of cocoa supply chains, individual company actions can only go so far in reducing negative impacts on forests and farmers. Thus, corporate engagement with multi-stakeholder initiatives, such as the Cocoa & Forests Initiative, that boost collective development of farm mapping, satellite monitoring tools, and programs to help farmers is key for all companies to achieve their commitments. This harkens the proverb, “if you want to go fast, go alone; if you want to go far, go together.”

Compared to the palm oil and timber sectors, awareness and engagement from companies on deforestation from cocoa production are still nascent. Unsurprisingly, there is a learning curve for companies making and implementing commitments in cocoa supply chains, as shown by the mixed uptake and reporting around best practices. Though there are a growing number of tools and initiatives to support companies, many are in their first few years, and the impacts are still unclear. As companies make progress toward building ethical cocoa supply chains, tools like the Accountability Framework will be crucial to driving positive outcomes for people and forests in cocoa-producing regions.

To learn more about how the Accountability Framework has been used in the two years since its launch, visit

The author would like to thank Kate Ellis, Philip Rothrock, Stephen Donofrio, and Leah Samberg for their contributions. This post is the first in a series on the cocoa supply chain. Look out for the next installment in the coming weeks!

Opinion: Voluntary Carbon Markets Do What the UN Cannot

27 June 2021 | United Nations climate boss Patricia Espinosa had her game face on at mid-year climate talks, which wrapped up June 18 after more than two weeks of online negotiations.

“While a significant amount of work remains, good progress has been made on many issues,” she told reporters.

That may be, but it’s not the case with carbon markets, where negotiators have simply dug into the same positions they’ve held for years.

“The mindset of engagement will need to change if progress on difficult issues is to be achieved this year at Cop26,” said Tosi Mpanu Mpanu, chair of the Subsidiary Body for Scientific and Technological Advice (SBSTA), in the closing plenary.

To promote a positive outcome at the November climate talks in Glasgow (COP26), the United Kingdom will gather 40 ministers on July 23rd in London to discuss carbon market issues. These talks will be led by the ministers of Singapore and Norway, two countries that themselves also want to utilize carbon markets.

Sadly, I doubt this will ultimately provide the clear guidance countries seek.

That’s because climate talks are politically sensitive, with many competing interests, and the arguments that keep blocking progress have little if anything to do with the technical issues involved in creating a robust global carbon market.

Put simply: that’s not what the United Nations is good at, and it’s not something they should be trying to do. The UN should limit its work to establishing accounting rules and the rules for reporting by countries, but leave the nitty-gritty issues up to individual countries and voluntary carbon markets.

There is precedent for this: the European Union has built a thriving market on the Kyoto Protocol’s Clean Development Mechanism (CDM) – namely, the European Union Emissions Trading Scheme (EU ETS) – despite the UN’s inability to correct the well-documented problems of the CDM itself. That’s because the UN did what it does best – creating basic universal rules – but letting the European Union develop its own market within those rules. At the same time, voluntary carbon markets have evolved quite nicely without micromanagement, and they even pioneered many of the practices governments are now implementing around the world.

Unresolved Issues

The UNFCCC left plenty of unresolved issues on the table, many of which are delineated in an informal note published at the end of the event. Here is a breakdown:

  • Guidance for nations that want to trade surplus emission reductions, called “Internationally Transferred Mitigation Outcomes” (ITMOs) under Article 6.2 of the Paris Agreement. other than transparency and double-entry bookkeeping, so that it is clear reductions are counted only once and by one country to comply with an obligation. The ITMO transferring country is to ‘correspondingly adjust’ (CA) the emissions reductions from its report. See how Switzerland and Peru are preparing to meet such demands in their recent CO2 deal.
  • Guidance on how a new centralized carbon credit program can ensure global reductions and learn from flaws of the CDM (Article 6.4 of the Paris Agreement).
  • The fate of the remaining billions old Kyoto-period CDM credits. I would propose to cancel one-third, bailout one-third, and transition one-third to the more ambitious Art 6.4 mechanism.

Here is a summary of the views that I saw resurfacing throughout the talks, as well as my comments on what they mean:

Expressed View: ‘Let’s wait with decisions on Articles 6.2. and 6.4 until there is more progress on ‘non-market-based options’ (Article 6.8).

My Take: Why wait? Countries are free to choose any option they prefer, and we don’t need to have all alternative approaches finalized before using carbon markets.

Expressed View: ‘We should apply share of proceeds (SOP) on Article 6.2′.

My Take: That demand doesn’t make sense. It is fair to apply a fee on a credit mechanism like Article 6.4, as was the case with the CDM to collect funding for adaptation, but adding a fee to each ITMO transfer burdens the trade and is not needed as nations that make use or cross border trade and regional emissions trading systems usually already donate to the Adaptation Fund with revenues of auctioning trading system allowances.

Expressed View: ‘We should wait for guidance on carbon trade until developing countries are transparent on the implementation of the Paris Agreement and how they meet their targets.

My Take: Without any support, it is hard for developing countries to report on all their emissions for the first time and to predict how and if they will meet their National Determined Contribution (NDC) target. Against this background, it’s difficult to correspondingly adjust IMTOs from their account. There are exceptions, of course. It’s worthwhile for some more advanced developing countries like Peru, which is establishing an emissions budget to track progress and wants to operate an ITMO transfer registry, but that is the exception. For others, there is the international meta registry that Markit is preparing and the voluntary carbon market, which establishes transparency of emissions and reductions that help meet their national target. (Editor’s notes: other efforts to unify registry data are underway including the World Bank’s Climate Warehouse and Ecosystem Marketplace’s complementary build-out of its trade accounting and reporting platform EM Global Carbon Survey). In my view, the voluntary carbon market (VCM) does not need to wait for UNFCCC decisions, as corresponding adjustments are designed to avoid double counting amongst countries and not among entities (see my earlier column on Ecosystem Marketplace on this).

Example of ITMO transfer between Peru and Switzerland

Countries can already make use of transferred mitigation outcomes under Article 6.2 as long as they are transparent and apply double-entry bookkeeping

More is expected outside the UN regime from a carbon club of countries that cooperate in making use of carbon markets to help meet CO2 targets or link their emissions trading systems. The EU Commission and the United States as well as Germany have indicated their interest in working with carbon clubs.

Also, the independent voluntary carbon market can help meet nations meet domestic CO2 targets. For example, investing in a cookstoves project in Tanzania can help Tanzania meet its NDC target. By purchasing voluntary carbon credits, companies can compensate for the impact of their remaining residual greenhouse gas emissions, in addition to reducing their own avoidable reductions, as this paper from the International Carbon Reduction and Offset Alliance (ICROA) makes clear.